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Public Policy: Medicare


Established under the Medicare Modernization Act of 2003, the Medicare prescription drug benefit — also known as Medicare Part D — is voluntary insurance that Medicare beneficiaries can purchase to help cover the costs of their prescription drugs.  In 2015, about 72 percent (over 39 million) of Medicare beneficiaries enrolled in a Part D plan.


The Social Security Administration (SSA) advises Americans to keep their Social Security card in a safe place.  At the same time, the Centers for Medicare and Medicaid Services (CMS) tells their beneficiaries to carry their Medicare card – which includes their Social Security number – with them at all times.  What is a Medicare beneficiary to do?  And what should the government do about this conflict?

The Affordable Care Act (ACA), signed into law on March 23, 2010, aims to provide greater access to health care coverage, improve the quality of services delivered and reduce the rate of increase in health spending. The ACA provides new ways to help hospitals, doctors and other health care providers coordinate care for beneficiaries so that health care quality is improved and unnecessary spending reduced. Improvements made in the ACA to Medicare preventive services and prescription drug coverage have lowered the out-of-pocket costs of millions of seniors. Below are some of the ways that the Affordable Care Act is helping seniors.

Since passage of the Affordable Care Act (ACA), Republicans have accused Democrats who voted for health care reform of "cutting" Medicare. At the same time, Republicans in the House of Representatives have supported five Republican budget resolutions, introduced by House Budget Committee Chairmen Paul Ryan (R-WI) and Tom Price (R-GA), that retain the same savings in Medicare spending while repealing the Affordable Care Act's Medicare improvements.

Medicare is the principal source of health insurance coverage for over 55 million Americans, including 9 million disabled workers who have been receiving Social Security benefits for two years or longer. Since the program's inception in 1965, America’s seniors have been able to count on receiving Medicare when they reach age 65. But now, some in Washington who are looking for ways to reduce federal spending want to make seniors wait for up to two additional years - to age 67 - in order to qualify for Medicare.

Congressional deliberations about how to reduce federal Medicare spending, or how to pay for other priorities, include proposals for further means testing Medicare - that is, requiring higher-income beneficiaries to pay more of Medicare's costs.

The House Budget Committee-passed Budget Resolution for Fiscal Year 2017, introduced by Budget Committee Chairman Tom Price (R-GA), would achieve savings for the federal government by privatizing MedicareBeginning in 2024, when people became eligible for Medicare they would not enroll in the current program; rather, they would receive a capped payment to be used to purchase private health insurance or traditional Medicare. This could increase their out-of-pocket health care costs and limit their choice of doctors. 

For decades, policymakers have debated how much to reimburse private Medicare Advantage (MA) plans for serving seniors.  Currently, the federal government pays MA plans, which cover about 30 percent of Medicare beneficiaries, more per beneficiary than traditional Medicare for providing the same services. Provisions in the Affordable Care Act (ACA) aimed at equalizing MA and traditional Medicare payments, were estimated to save $156 billion over 10 years. 

The Affordable Care Act (ACA), also referred to as “Obamacare,” includes important provisions to reduce wasteful Medicare spending. This will strengthen the solvency of the Medicare program and reduce the rate of increase in Part B premiums for all Medicare beneficiaries. The ACA also improves the care provided to Medicare Advantage enrollees and limits their out-of-pocket costs. 

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