Transcript Health Reform: Guaranteeing Medicare’s future while protecting older adults and people with disabilities.

Health Reform:
Guaranteeing Medicare’s future
while protecting older adults and
people with disabilities
Strengthening Medicare and benefiting enrollees
We don’t have to ask older and disabled Americans
to pay more for their health care to reduce the
federal deficit. There are smarter ways to strengthen
Medicare.
Health care reform slowed the growth of Medicare
spending without cutting benefits for older adults
and people with disabilities.
Declining Obligations
Health care reform reduced the projected gap in
Medicare’s finances, strengthening the program’s
hospital insurance trust fund:
75-Year Projected Unfunded Liability for Medicare
Hospital Insurance (HI) Trust Fund, 2003-2011
16
14
12
11
10
8.2
11.6
12.4
13.4
Health
reform
enacted
(March 2010)
8.6
8
6
5.9
4
2.4
3
2
0
2003
2004
2005
2006
2007
2008
2009
Unfunded liability (in trillions of dollars)
2010
2011
Source: Annual reports of
the Boards of Trustees of the
Federal Hospital Insurance
and Federal Supplementary
Medical Insurance Trust
Funds, 2003-2011.
Note: Projected unfunded
liability for the Medicare HI
trust fund decreased
significantly in 2010 as a
result of the Affordable Care
Act, which enacted payment
and delivery system reforms
and increased the
contribution level for the
highest-income workers. In
2011, the long-term
projected HI trust fund deficit
increased, in part because
the recent recession
depressed 2010 taxable
earnings considerably more
than previously expected.
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Keeping Medicare Solvent
Medicare Trustees’ estimate of the period in
which the HI trust fund will remain solvent
30
28
28
25
23
19
20
15
15
15
12
12
13
11
10
8
5
0
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
After declining rapidly
for nearly a decade, the
Medicare trustees’
estimate of the solvency
of Medicare’s hospital
trust fund shot up after
the passage of health
reform. The dip in 2011
is related to lower than
expected tax revenues
caused by a weak
economy.
Projected years of HI trust fund solvency
Source: Annual reports of the Boards of Trustees of the Federal
Hospital Insurance and Federal Supplementary Medical
Insurance Trust Funds, 1970-2011.
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How Did Health Reform Bring
Down Medicare’s Costs?
Not by cutting benefits or asking seniors to
pay more
Health Reform Tames Cost Growth
Health reform put the
brakes on rapid medical
inflation, bringing the
projected growth of health
care spending to its lowest
rate in decades. Although
the health reform law will
slow both public and
private spending, Medicare
will remain more costeffective than private
insurance:
a For
common benefits. CMS, NEH Web Tables (Washington, DC: 2009), Table 13.
total benefits. CMS, National Health Expenditure Projection, 2010-2020
(Washington, DC: 2011), Table 17.
c Legislation enacted in 1997 included a number of provisions that slowed growth in
payments to hospitals, physicians, and other providers and established new payment
methodologies for skilled nursing facilities, home health agencies, and other service
categories.
d The Affordable Care Act reduced projected Medicare spending through payment and
delivery system reforms and an increase in the payroll contribution from the highestincome earners.
b For
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Health Reform Rationalizes Payment Rates
Graph taken from
Patricia Davis et al.,
“Medicare Provisions
in the Patient
Protection and
Affordable Care Act,”
Congressional
Research Service.
November 3, 2010
Under new rules established by health reform doctors will
continue to get pay raises every year, but these raises will be
about 1 percent lower than they would have been under prior
law. This should save nearly $200 billion over ten years.
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Health Reform Cuts Waste
30
Reducing overpayments to Medicare Advantage plans
will save $136 billion over 10 years
25
25
23
21
19
20
17
15
13
Source: CBO, Cost estimate for
the amendment in the nature of
a substitute for H.R. 4872,
incorporating a proposed
manager's amendment made
public on March 20, 2010
9
10
6
5
Savings from reductions in
Medicare Advantage overpayments
(in billions)
2
0
2011
2012
2013
2014
2015
2016
2017
2018
2019
According to The Commonwealth Fund, privately managed Medicare Advantage plans
cost the federal government 13 percent more than the same care delivered through
traditional Medicare. Ending these overpayments and paying private plans at the same
rates as traditional Medicare will save $136 billion over the next decade, according to
the Congressional Budget Office.
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Health Reform Fights Fraud and Abuse
Health reform included a number of provisions that strengthen
Medicare’s stamp out fraud and abuse, including:
• Enhanced oversight protocols, especially in areas identified as
presenting a high risk of fraud.
• More funding for anti-fraud measures, such as databases to
share information between various state and federal agencies.
• Stiffer penalties for violators and high standards for various
providers
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Health reform is about smart reforms to strengthen Medicare.
Health reform cuts excess payments to insurance companies.
It cuts spending while improving benefits.
Health reform lowers out-of-pocket costs for people with
Medicare.
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Health Reform Improves Benefits
Average out-of-pocket savings under the new health reform law
$0
For all people with Medicare
-$500
For those who do not reach the
"donut hole"
-$1,000
For those reaching the Part D
"donut hole"
-$1,500
Source: Healthcare.gov. Estimates from
a memo by John Shatto, Director of
Medicare & Medicaid Cost Estimates
Group, CMS Office of the Actuary,
October 5, 2010.
-$2,000
-$2,500
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Health reform saves money for Medicare enrollees. The biggest change is reform of
prescription drug coverage. Before health reform, individuals were responsible for the
entire cost of drugs between their drug plans’ coverage limit and a catastrophic cap of
$6,154. Health reform phases out this “donut hole” in the coming decade, saving
thousands of dollars for enrollees.
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Health Reform Protects Pocketbooks
Sources of savings for Medicare enrollees
under health reform
$0
Changes in
premiums
-$50
Reductions in
coinsurance
payments
-$100
-$150
-$200
-$250
-$300
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Older adults and
people with disabilities
who do not use a lot of
drugs also benefit
from lower out-ofpocket costs under the
new health reform law.
Changes to premiums
and coinsurance
payments will reduce
spending for most
enrollees.
Source: Healthcare.gov. Estimates from a memo by John Shatto,
Director of Medicare & Medicaid Cost Estimates Group, CMS Office
of the Actuary, October 5, 2010.
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Health Reform Covers Prevention
Under health reform, people with
Medicare can now receive preventive
medicine without any copays. Services
that are now free include:
• An annual wellness visit and the
creation of a personalized prevention
plan.
• Blood pressure measurements and
detection of cognitive impairments
• Discussion of risk factors for various
conditions and a 5-year screening
schedule.
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It’s important to keep
Medicare costs as low as
possible for the country
and to guarantee health
and financial security for older adults and
people with disabilities.
Health reform, the Affordable Care Act,
proved that we can lower costs without
cutting benefits or asking people with
Medicare to pay more.
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Finishing the Job
Health reform improved Medicare in a number of ways,
but there is plenty more that can be done to reduce
costs without cutting benefits, including:
• Negotiating with pharmaceutical companies to get
the best deals on brand-name drugs.
• Reforming the inefficient administrative system for
“dual-eligibles,” people with Medicare and Medicaid,
that splits the responsibility for millions of patients’
care between states and the federal government.
• Strengthening Medicare’s ability to control waste and
fraud.
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