Obamacare’s Impact on Medicare Advantage

Obamacare has implemented major changes in the United States’ health care system, especially in Medicare.

By Chris Berry

Obamacare mandates $716 billion in Medicare payment reductions from 2013 to 2022. These across-the-board changes in Medicare payment formulas include a number of Medicare providers, including hospitals, nursing homes, home health agencies, and hospice agencies.

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While politicians will do their best to convince you that Medicare payment reductions only influence providers and not beneficiaries, the reality is that funding cuts for Medicare services will affect those who depend on those services.

Seniors’ ability to access Medicare services will continue to wither away if Congress continues to implement Obamacare’s major reductions. Medicare Trustees project that as a result of lower Medicare payment rates, 15 percent of hospitals, skilled nursing facilities, and home health agencies will no longer be profitable by 2019, and jump to 25 percent in 2030.

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The difficulty which seniors are experiencing accessing care is certain to increase if Obamacare continues to be implemented. Medicare’s payments for health services would drop increasingly below provider’s costs. As a result, providers will not be able to sustain continuing negative margins and would be forced to withdraw from serving Medicare beneficiaries or shift a major percentage of Medicare costs to their non-Medicare, non-Medicaid payers.

Along with the providers payment reductions, Obamacare reduces payments to Medicare Advantage (MA) plans by an estimated $156 billion from 2013 to 2022. Roughly 27 percent of all Medicare beneficiaries are enrolled in MA plans. MA plans are appealing to beneficiaries because they offer more generous and comprehensive coverage than traditional Medicare by capping out-of-pocket costs and offering drug coverage.

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After Obamacare was enacted 2010, the Medicare Actuary projected that the impact of Obamacare’s cuts would be dramatic: “We estimate that in 2017, when the MA provisions will be fully phased in, enrollment in MA plans will be lower by about 50 percent (from its projected level of 14.8 million under the prior law to 7.4 million under the new law).” As a result, these enrollees would have to enroll a traditional Medicare program that was less generous and ultimately cause them to lose their current health plan and be subject to increased out-of-pocket costs.

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