Understanding Medicare and How it Relates to the Affordable Care Act
About Medicare
Medicare is a federal health insurance program in the United States established in 1965 under the Social Security Administration and now administered by the Centers for Medicare & Medicaid Services (CMS). It primarily serves people over 65, regardless of income, but it also provides health insurance to younger people with disability status as determined by the Social Security Administration, as well as people with end-stage renal disease and amyotrophic lateral sclerosis.
Medicare is divided into several parts that cover different aspects of healthcare:
Medicare Part A (Hospital Insurance): Covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care.
Medicare Part B (Medical Insurance): Covers certain doctors' services, outpatient care, medical supplies, and preventive services.
Medicare Part C (Medicare Advantage Plans): A type of Medicare health plan offered by a private company that contracts with Medicare to provide all your Part A and Part B benefits.
Medicare Part D (prescription drug coverage): Adds prescription drug coverage to Original Medicare, some Medicare Cost Plans, some Medicare Private-Fee-for-Service Plans, and Medicare Medical Savings Account Plans.
These parts of Medicare help cover specific services and supplies in hospitals, doctors’ offices, and other healthcare settings.
How Medicare Relates to the Affordable Care Act
The Affordable Care Act (ACA), enacted in 2010, introduced several changes to improve Medicare for beneficiaries, including adding more preventive services, expanding Medicare Part D to close the "donut hole" (a gap in prescription drug coverage), and reducing costs and improving care delivery through the various quality initiatives under the Centers for Medicare and Medicaid Services.
Here are some key aspects of how the ACA impacts Medicare:
Closing the Prescription Drug "Donut Hole":
The ACA made significant changes to Medicare Part D by providing discounts on drugs in the coverage gap. By 2020, the "donut hole" was effectively closed, meaning beneficiaries now pay only 25% of the costs for brand name and generic drugs while in the donut hole.
Free Preventive Services:
The ACA added preventive services to Medicare, such as mammograms or colonoscopies without charging Part B coinsurance or deductibles. It also added a free annual wellness visit, which helps to create a personalized prevention plan.
Improved Coordination of Care:
The ACA initiated several programs intended to improve coordination of care for those with chronic conditions, enhance the focus on primary care, and reduce hospital readmissions. Initiatives like Accountable Care Organizations (ACOs), the Medicare Shared Savings Program, and others aim to incentivize healthcare providers to deliver more effective and efficient healthcare.
Funding and Fraud Reduction Efforts:
The ACA provided additional funding to Medicare to help extend the life of the Medicare Trust Fund. Measures to combat fraud, waste, and abuse were also strengthened under the ACA to save money for taxpayers and Medicare beneficiaries alike.
Cost Reductions for Consumers:
The ACA sought to reduce costs and improve the quality of care, with Medicare Advantage and the Part D program seeing lower costs through increased competition and regulation.
Innovation in Payment and Service Delivery:
The ACA established the Center for Medicare and Medicaid Innovation (CMMI) to test innovative payment and service delivery models to reduce program expenditures while preserving or enhancing the quality of care for those who receive Medicare, Medicaid, or Children’s Health Insurance Program (CHIP) benefits.
Final Thoughts
Overall, the ACA has significantly impacted Medicare by broadening coverage options, closing coverage gaps, and initiating reforms that emphasize quality over quantity in healthcare services. The relationship between the ACA and Medicare demonstrates the government’s ongoing efforts to reform healthcare delivery, making it more cost-effective, efficient, and accessible to American seniors and other eligible individuals.
Interested in how the Affordable Care Act enhances Medicare for you or your loved ones? Schedule an appointment with advisor to discuss the options available to you. Stay informed and proactive about your health insurance options.
