Older Americans, Medicare, and the Affordable Care Act: What's Really in It for Elders?

By Kaplan, Richard L. | Generations, Spring 2011 | Go to article overview
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Older Americans, Medicare, and the Affordable Care Act: What's Really in It for Elders?


Kaplan, Richard L., Generations


The ACA's full implications will not be known for years, but its impact on Medicare will be significant and immediate. What might really happen to Medicare under the new health reform?

The Patient Protection and Affordable Care Act (ACA) is the most significant healthcare legislation enacted since the passage of Medicare and Medicaid forty-five years ago. The new law's full implications will not be known for years, but its impact on the Medicare program will be significant and immediate. Many of its effects will be beneficial to enrollees in Medicare, despite the fact that polls of older Americans reveal a pervasive antipathy to the new statute. At the same time, financing the ACA includes more than half a trillion dollars of cuts to Medicare. It defies common sense to believe that cuts of this magnitude will not have some deleterious effect on how older Americans pay for their medical needs.

Preventive Services

Even before healthcare reform was enacted, Medicare began to cover more preventive services, in line with United States healthcare plans generally, and in an effort to minimize the need for expensive medical interventions down the road. For example, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA) provided that in the first six months (later amended to the first year) of a person's enrollment in Medicare Part B, that person is entitled to an "initial preventive physical examination." The purpose of this exam is to promote health and detect diseases before they worsen. Along with various cancer screenings and tests for cardiovascular disease, this examination includes "education, counseling, and referral" services.

In 2008, the final year of President George W. Bush's administration, this examination was expanded to incorporate "end-of-life planning," which included information about "an individual's ability to prepare an advance directive in the case that an injury or illness causes the individual to be unable to make health care decisions" (Title 42 U.S. States Code 1395x).

To this now-expanded examination, the ACA adds "annual wellness visits." These visits include a comprehensive risk assessment and a "personalized prevention plan." These services will consider a person's medical and family history, various biometrics such as body mass index and blood pressure, cognitive impairments, and a five-to-ten year schedule of screening tests. These services will be provided by the Medicare program at no charge to the enrollee-no deductibles or co-payment obligations will apply to wellness visits. Such services have long been a touted component of Medicare managed care, and the ACA extends them to the traditional Medicare program. Annual wellness visits now available to every Medicare enrollee should significantly improve enrollees' health, and might reduce Medicare's programmatic expenses down the road.

Prescription Drugs

One of the most significant categories of medical spending for many older adults is prescription medications-an issue also addressed in 2003. Medicare Part D, the program's coverage for prescription drugs, did not begin, however, until 2006, and it included a coverage gap known as "the donut hole." After an annual deductible, the initial coverage component of a Medicare Part D plan required enrollees to pay 25 percent of their prescription drug costs. Once the total drug costs (what the plan paid and what the enrollee paid) reached $2,830 (in 2010), enrollees went into the donut hole, where they paid the total cost of their drugs. This no-coverage feature continued until total drug costs reached $6,440. At that point, a catastrophic level of coverage kicked in where enrollees paid no more than 5 percent of the cost of a drug, with no coverage limit.

This strange configuration has no counterpart in any other healthcare financing arrangement, public or private, in the United States or elsewhere. It resulted from the interaction of three unrelated political imperatives.

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