Medicare and Healthcare Reform? I have been reading all I can get my hands on relative to the impact of this bill to PledgePoint’s customers and have found four basic problems:
1. Almost everything that I read is biased by someone trying to push something. There are cases where one could argue there is no bias but in those cases, the information tends to be so shallow that it is of little use.
2. This is a very big bill – 400,000 words long. I do not believe that any human being is capable of processing all of that information in any comprehensive sense.
3. Because the HealthCare Reform bill has very little direct impact on Medicare, we are forced to speculate on the indirect impacts. Speculation is often off base and of little use.
4. Both political sides agree that this bill will change before many parts of it every take effect. If you want to talk about speculation, how about trying to figure out who will make what changes and what changes they will make. So what should you do? I really wish I was smart enough to know or arrogant enough to tell you, but I am neither. There is, however, one thing I can tell you for sure:
DON’T PANIC. Your 2010 plan is in place and for the most part you will not see any immediate changes. People with less than honest intentions are going to try to capitalize on the confusion you are feeling to convince you to make changes that are not likely to be in your best interest. Ignore them, take a deep breath and remember that come next month in November, a new Annual Enrollment Period begins and you will have every chance to decide if you would like to make a change (foryou) at that time. In the meantime, you
are free to do your own research, let the dust settle and VOTE your conscience this November.
And of course, you can always call and visit with your PledgePoint professional anytime you wish. We may not always have all the answers but I can assure you we will always care and always work hard to put YOUR interests first.
SO IS HEALTHCARE REFORM A GOOD THING OR A BAD THING?
The HealthCare Reform bill is nearly 2,000 pages long. It is impossible to write anything that long without it having some good and some bad. Whether you feel it is more good than bad, or bad than good probably has more to do with your political learning than anything else. No matter how you feel about more involvement by Washington DC, it is fair to say that this bill (and the changes we will see later as a result of this bill) will have a substantial impact on America and its economy over the next decade and beyond.
At the same time, much of the bill is phased in over time. It will be four to five years before the bulk of the changes can really be felt. It is doubtful that the bill will remain untouched over that period. In other words, it doesn’t serve a lot of purpose to speculate on the impact of something five years out that may well never happen or perhaps will happen in a very different way.
HOW DOES HEALTHCARE REFORM IMPACT MEDICARE AND MEDICARE RECIPIENTS?
HealthCare Reform was not aimed at Medicare directly. Instead, it was based on the belief that we need to provide coverage options for those who do not have healthcare coverage at the current time. Somewhat related to this concern is the overall concern that healthcare in America is too expensive and if we fail to address this, it will represent a long term drag on our economy. This is not to suggest that HealthCare Reform will not have any impact on seniors and Medicare. Some major direct impacts are as follows:
1. About 1/2 of the funding from this bill comes from “savings” (or “cuts”) to Medicare.
2. The bill does add two additional benefits to Original Medicare.
3. The legislation establishes an Independent Payment Advisory Board whose charge is to submit legislative proposals to reduce per capita Medicare spending. Let’s talk a little further about each of these impacts:
MEDICARE SPENDING REDUCTIONS:
About 1/2 of the spending cuts will come from what the White House terms as “overpayments” to Medicare Advantage plans. Whether you call them “cuts” or “overpayments”, one thing is certain:
Medicare Advantage plans will receive less from the Federal Government for the coverage they provide to seniors. The impact of these spending reductions runs between $132 and $400 billion, depending on who you believe and how you calculate the impact. Essentially, payments to Medicare Advantage providers will be frozen, with no impact for inflation. Given the healthcare costs
have been rising at between 6-8% per year, this will have a significant impact on these plans, their costs and the benefits
they offer. The spending reductions are going to be phased in over three years, beginning in 2011. Our best guess is that the impact on the offerings for 2011 will be somewhat modest, as insurers will wish to retain market share and watch the outcome of the 2010 elections. It is reasonable, however, to assume that over the next three years we will see some or all of the following:
1. Fewer new plans, if any, will enter the market.
2. Most plans will implement at least some reductions in the benefits offered to seniors.
3. Where possible, plans will attempt to reduce payments to providers (doctors, hospitals, etc.) though that will be difficult if they wish to maintain reasonable network coverage.
4. Most plans will likely add to the premiums charged to seniors.
The remainder of the spending reductions will come from reductions in certain payments for Home Healthcare (about$60 billion) and modest reductions in payments to hospitals (about $22 billion over ten years). The bill also ignores the planned cuts in payments to physicians (in effect, assuming they will remain in the place). This is perhaps the second most significant impact to Medicare. If these
cuts were allowed to go through (which is politically doubtful), we would see an even greater shortage of physicians willing to see patients who are on Original Medicare.
NEW ADDITIONAL BENEFITS TO MEDICARE RECIPIENTS:
Part of the HealthCare Reform bill provides for a closing of the “donut-hole” that Congress created when they added Pharmacy coverage to Medicare in 2006. The size of the hole will decrease gradually over the next ten years. The HealthCare Reform bill will also add coverage for annual wellness visits to those on Original Medicare. Again, those persons covered by Medicare Advantage plans already have this coverage in most cases.
PAYMENT ADVISORY BOARD:
There has been precious little talk about what I think may be one of the biggest impacts to seniors from the HealthCare Reform bill. Beginning in 2014, this panel is charged with making recommendations to Congress if Medicare spending should exceed the growth rate in the Consumer Price Index (inflation). Keep in mind that healthcare spending has easily outpaced the overall inflation rate and unless you believe in the tooth fairy, the law of supply and demand will dictate that this will easily continue through 2013. What does this mean? This is a fun one because the law prohibits any idea that would “ration care”, “raise taxes” or “change benefits”. Hmmmm… maybe we should believe in the tooth fairy?
WHERE CAN I GO TO FIND MORE INFORMATION?
As stated in the introduction, almost all information is available to the reader is either biased or too shallow to be useful. In researching for this newsletter, I found some of the following sites to be useful or at least interesting:
1. The Christian Science Monitor published an article considering the impact of the reform bill on Seniors. This can be found at http://www.csmonitor.com/layout/set/print/content/view/print/289438
2. Although I really wanted to avoid listing anything from either of the political parties, the timeline found at the following link is pretty good and taken by itself, sticks pretty well to the “facts”. Please note that about 50% of the major items listed on the timeline impact Medicare.
3. HealthCare Reform will impact long term care through the Community Living Assistance Services and Support (CLASS) Act. Under this bill, all qualified Americans will be automatically enrolled with an option to opt out. Those who have paid premiums for five years and have certain functional limitations may be eligible for a $50 daily benefit. NOTE: At $50 per day, this bill will do virtually
nothing to cover your exposure to long term care costs. If you have a long term care policy and like it, don’t change anything as a result of CLASS. If you don’t have long term care coverage and would like to learn more, drop us a line and we can direct you to people we trust who can help. http://www.healthleadersmedia.com/content/LED-248406/
PledgePoint is here to help.Don’t be afraid to call us if you have any comments or questions on the above at (888)769-1981.