How an Obamacare Repeal Would Hurt Medicare

Will an Obamacare replacement protect Medicare beneficiaries?

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The Affordable Care Act, aka Obamacare, not only brought insurance coverage to millions of Americans through the Health Insurance Marketplace but it also expanded Medicaid in several states. People who could not afford health insurance had newfound access. What many people forget, however, is that the program also had a profound effect on Medicare.

The legislation faced repeal in 2017 by a Republican Congress. However, the repeal did not come to pass, at least not yet.

A plan that replaces Obamacare must first consider how the Affordable Care Act impacted Medicare. Then it must take into account how it will address (or whether it will address) those needs with new legislation.

CMS Innovation Center

If we do not change, we do not grow. The Centers for Medicare and Medicaid (CMS) Innovation Center came to exist under the Affordable Care Act and looks into ways to model new payment and health-care delivery methods to not only improve the quality of care but to also reduce expenditures for Medicare, Medicaid, and Children's Health Insurance Program (CHIP).

Let there be no mistake. CMS sets the stage for the entire insurance industry. If CMS finds something that works, private insurers are sure to join the cause.

Since its inception, more than 30 models for payment have been proposed and explored. The CMS Innovation Center has looked at accountable care organizations and bundled payments as different ways to pay for healthcare. The shift from pay-for-service (a doctor charges for each individual service) to pay-for-quality (a doctor is reimbursed based on quality care outcomes) is well underway. As much of 30 percent of Medicare payments are now processed this way.

Health-care programs have also improved quality to millions of Americans. The Comprehensive Primary Care Initiative allowed an expansion of primary care in certain states to benefit those in need. The Comprehensive End-Stage Renal Disease (ESRD) Care Initiative improved care access for people on dialysis. The Strong Start for Mothers and Newborns decreased premature births and long-term complications for new families. The Diabetes Prevention Program has been so successful it will be expanded nationwide in 2018.

Will an Obamacare repeal put an end to these programs? An Obamacare replacement should consider how it will impact on the future growth of medicine, both in quality and in costs.

Fraud, Waste, and Abuse

Fraud, waste, and abuse run rampant in health care, costing taxpayers money in the long run. The Affordable Care Act took measures to decrease this misuse and redirect that money back towards the Medicare program. It did so by strengthening the Medicare Fraud Strike Force.

The Medicare Fraud Strike Force was established in 2007 and works in concert with the Department of Justice, the Federal Bureau of Investigation, the Office of the Inspector General, and local law enforcement. Operating out of nine cities nationwide - Baton Rouge, Louisiana; Brooklyn, New York; Chicago, Illinois; Dallas, Texas; Detroit, Michigan; Houston, Texas; Miami, Florida; Los Angeles, California; and Tampa, Florida - the Medicare Fraud Strike Force has saved the program twice as much as it did before the Affordable Care Act was enacted in 2010.

As of June 2016, the Medicare Fraud Strike Force's efforts led to 2,522 indictments. The largest sting in the Task Force's history took place in June 2016 when 301 individuals, 61 of them being licensed medical professionals, were charged with conspiracy to commit health care fraud, money laundering, and aggravated identity theft. Their criminal activity accounted for approximately $900 million in false billing.

Health-care reform moving forward must continue to take aim at those who try to abuse the system. It will be the only way to keep costs down for those who need it most.

Hospital Readmission Rates

Everyone agrees that hospital care has to be of utmost quality. People's lives and well-being depend on it. The Affordable Care Act took measures to incentivize hospitals to improve their care quality. They did so by assessing how often people were readmitted to the hospital within 30 days. Being readmitted to the hospital, they presumed, would be an indicator that the hospital had not optimized care to the individual before he was discharged.

The Readmissions Reductions Program, created under the Affordable Care Act, specifically looked at admissions for heart attack, heart failure, pneumonia, hip/knee replacement, and chronic obstructive pulmonary disease (COPD). Hospitals that had high levels of readmissions in this area were penalized by a percentage decrease in their Medicare payments.

Since 2012, hospital readmission rates have been on a steady decline. Heart attack readmission rates went down by 2.8 percent, heart failure rates by 2.8 percent, and pneumonia rates by 1.5 percent from 2007 to 2014. The question, of course, is whether or not this actually reflects an improvement in quality care. There is concern that hospitals may be avoiding penalties by putting people "under observation" as opposed to readmitting them as inpatients.

With an Affordable Care Act repeal, the Readmissions Reductions Program may go away. Hopefully, there will be continued, or new efforts to address the quality of care people receive in hospitals.

Part D Donut Hole

Medicare Part D came into existence under President George W. Bush when the Medicare Modernization Act came to pass in 2003. Beneficiaries were able to take advantage of Part D prescription drug benefits starting in January 2006 with one caveat. The law included the infamous "donut hole," a coverage gap that required Medicare beneficiaries to pay 100 percent out-of-pocket for their medications once they and their Part D plan spent a certain amount of money in a given year.

Obamacare helped to decrease those out-of-pocket costs.

First, it negotiated down the cost manufacturers could charge you for your medications. Brand-name manufacturers, in particular, would offer their drugs at a 50 percent discount during the time you were in the donut hole.

Second, Obamacare decreased how much you would pay out-of-pocket by requiring Part D plans to pay a small portion of your drug costs during the donut hole. You would still pay more that you would go outside of the donut hole, but the savings were significant. The White House reports that savings have benefited more than 8 million people, saving them over $11.5 billion since 2010.

Third, the amount your plan paid for your medications would gradually increase until the coverage gap closed altogether by 2020. Simply put, you would pay your usual premiums, deductibles, copayments, and nothing more.

The donut hole would return with an Obamacare repeal. With prescription drug costs higher than ever, the impact on American seniors would be devastating. An Obamacare replacement would need to take this into account to assure people can access the medications they need.

Preventive Screening Services

Obamacare also improved coverage for preventive screening services. As long as your doctor accepted assignment, meaning he agreed to the Medicare Physician Fee Schedule, those preventive services would no longer require a copayment or coinsurance. They would be offered to you free of charge.

Free preventive services covered by Medicare included:

  • Annual Wellness Visits
  • Blood pressure monitoring
  • Breast cancer screening (mammograms)
  • Cervical cancer screening (Pap smears and human papillomavirus (HPV) testing)
  • Colon cancer screening (fecal occult blood testing, colonoscopy, sigmoidoscopy)
  • Depression screening
  • Lipid screening
  • Prostate cancer screening (prostate-specific antigen)
  • Vaccinations (influenza, pneumococcal)

Some services—abdominal aneurysm screening, diabetes screening, hepatitis C screening, HIV screening, lung cancer screening, osteoporosis screening, and evaluation for sexually transmitted diseases—will also be free but are available only to people who are considered at high risk. Colon cancer screening with a stool DNA test would only be covered if the person were at LOW risk.

Decreasing coverage benefits to seniors that could keep them healthy or that could allow early treatment of complicated diseases is concerning. I would say it even raises moral issues. Let us not forget that the more advanced a disease is when it is diagnosed, the more expensive it will cost to treat. An Obamacare replacement should consider the health consequences and long-term costs to those it covers.

A Word from Verywell

The non-partisan Congressional Budget Office assessed the impacts of an Obamacare repeal and projected that Medicare spending would increase by $802 billion over 10 years. A new health-care plan would need to factor this into the equation.

The issue of health-care reform is not only politically but emotionally charged. Whether or not you believe in the merits of the Affordable Care Act, you need to understand what Medicare provisions will change with a repeal of the law. It will let you know what to watch for when the inevitable Obamacare replacement comes to pass.

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