Energy and Commerce Committee Assesses Impact of Cuts to Medicare Program
Earlier this year, House Budget Chairman Paul Ryan reintroduced a budget proposal that would end Medicare as we know it, replacing Medicare’s guaranteed benefits with a capped voucher that beneficiaries could use to purchase their own health insurance. The proposal would also establish block grants for Medicaid, meaning the government would provide a capped amount of funding to states for the program. The proposal cuts Medicaid by over $800 billion. These changes would significantly increase costs and decrease access to care for Medicare and Medicaid beneficiaries.
In response to the Ryan budget proposal, the House Energy and Commerce Committee has analyzed the impact the proposal would have in all 405 congressional districts. The Energy and Commerce Committee details the ways in which the proposal reduces access to care for millions of Medicare and Medicaid beneficiaries across the country. For example, in New York’s 18th Congressional District, older adults and people with disabilities would spend an extra $95 million in prescription drug costs over the next 10 years. Similarly, nearly 100,000 Medicare beneficiaries in New York’s 8th Congressional District alone would no longer be able to access free preventive services.
While policymakers claim the goal of Chairman Ryan’s budget proposal is to save the government money, it shifts costs to Medicare beneficiaries and does little to address the real cause of increased Medicare spending: rising costs in the health care sector overall (see this week's Spotlight on how Medicare can be a solution to this problem). According to the Congressional Budget Office, over time, proposals similar to the one Chairman Ryan introduced would double out-of-pocket costs for people with Medicare. Policies that aim to save money in the Medicare program should be based on solutions that preserve access to affordable health care and protect beneficiaries from the burden of added out-of-pocket health costs.
View the Energy and Commerce Committee’s District-by-District Fact Sheets.
Part D Drug Plan Premiums Remain Steady in 2013
This week, Department of Health and Human Services (HHS) Secretary Kathleen Sebelius announced that average premiums for basic Medicare Part D prescription drug plans are projected to remain steady at $30 or less in 2013. Keeping out-of-pocket expenses constant for people with Medicare—half of whom live on annual incomes of $25,000 or less, and who, on average, already spend 15 percent of their incomes on health care costs—ensures they can maintain their drug coverage and afford their medications.
At the same time, thanks to the Affordable Care Act (ACA), more than 5.2 million older adults and people with disabilities have saved nearly $4 million on their prescription drug costs as a result of the law’s closure of the coverage gap, or doughnut hole. In the first half of 2012 alone, affected beneficiaries saved an average of $629 per person on out-of-pocket expenses. As the ACA continues to be implemented, discounts for beneficiaries in the coverage gap will increase: in 2013, people with Medicare will receive 52.5 percent off the cost of their brand name drugs (compared to 50 percent this year) and 21 percent off the cost of their generic medications (compared to 14 percent this year).
Read HHS’ press release.
Read about the benefits the ACA has provided people with Medicare in Medicare Rights’ fact sheet, “The Affordable Care Act: Before and After.”
See Medicare Rights’ chart, “Health Reform and Medicare: Closing the Doughnut Hole.”
If you have drug coverage from a current or former employer or a union, whether you should enroll in the Medicare Part D drug benefit depends on the quality of your employer or union coverage and whether or not your employer or union coverage works with the Medicare drug benefit.
If you have coverage that is as good as or better than Medicare’s drug benefit (“creditable coverage”), you can keep it. You will not pay a penalty to join a Medicare Part D plan later, as long as you have not been without creditable coverage for more than 63 days. In addition, if you decide you want to drop your employer coverage and enroll in a Part D plan, you will have a Special Enrollment Period (SEP) to do so. Ask your employer or union whether your coverage is creditable, and get this information in writing.
If your coverage is not as good as Medicare’s, you may want to consider enrolling in Part D. Otherwise, if you want to enroll after you are first eligible, you may be subject to a premium penalty and have gaps in coverage.
Whether or not you can have Medicare drug coverage in addition to your employer coverage depends on your employer plan. If you want to keep your employer benefits and are considering joining a Part D plan, ask your employer if you can have both forms of coverage. You could lose all of your employer benefits (both health and drug) if you join a Medicare private drug plan. When you lose your employer benefits, you usually cannot get them back.
Learn more about enrolling in Part D if you have employer or retiree drug coverage at www.medicareinteractive.org or call our helpline at 800-333-4114.
This week, Medicare Rights Center President Joe Baker responded to Bill Keller's recent opinion piece, “The Entitled Generation,” about baby boomers. In his op-ed, Mr. Keller argues for “sensible” reform that is seemingly reliant on benefit cuts. But the “Republican plan” that Keller describes shifts Medicare costs to beneficiaries to decrease the federal deficit. Real cost-savings are only possible through cost control in the health care system overall. In fact, Medicare is an innovator in delivery—and thereby cost—reform. From 2011 to 2020, Medicare spending is projected to grow, per year per enrollee, by 2.7%, compared to 4.9% for private insurance, according to a recent Urban Institute report. Keller acknowledges that health care spending is the problem—but fails to see that Medicare should be the solution.
The Boomers, and their parents, built sound programs that have improved health and economic security. Now we must provide for future generations by addressing the real problem.
Read Mr. Baker’s response.
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