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Health Care Reform:

Health Insurance & Affordable Care Act

Voter Guide: Medicare

The issue:

Medicare, the government health insurance plan for Americans aged 65 and older and younger people with disabilities, covers nearly 47 million people. It is an expensive program, and with more Americans living longer and millions of baby boomers about to turn 65, the program is expected to grow, covering as many as 80 million people by the year 2030.

At the current rate of spending, officials estimate that Medicare’s Part A trust fund, which mostly pays for hospital care, will be unable to cover 100% of hospital insurance costs by 2024. So, something needs to be done. Here are some of the proposals on the table.

Proposals:

Cutting costs to save money

The health reform law, also known as the Affordable Care Act, includes a number of programs to reduce growth of Medicare spending by $716 billion:

  • Reduce overpayments to private Medicare Advantage plans. Medicare Advantage plans were being paid 9%-13% more than the traditional Medicare program to provide the same coverage. This is expected to save the Medicare program about $130 billion over 10 years.
  • Reduce future payments to health care providers. The law reduces future payment increases to health care providers, including hospitals, skilled nursing facilities, and home health agencies, by changing the way payment updates are calculated.
  • Create new health care organizations for better care. Deliver more coordinated, higher-quality care at lower costs.
  • Link quality to pay. Value-based purchasing is a new Medicare program that reimburses health care providers based on the cost and quality of care delivered, rather than the volume of care provided.
  • Reduce fraud and abuse. The law gives the government greater authority to identify and prosecute for costly fraud and abuse, which the Institute of Medicine estimates costs about $75 billion each year.
  • Require drug and insurance companies to contribute. Medicare beneficiaries have already seen lower costs as a result of this when they enter the gap in Medicare Part D known as the donut hole, which is scheduled to close by the year 2020.

Increase Medicare taxes for high-wage earners

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