Debt Deal Could Mean Changes to Medicare and Medicaid
After months of negotiations, lawmakers reached a compromise this week to increase the United States’ debt limit and avoid default. The Budget Control Act of 2011, signed into law on Tuesday by President Obama, increases the debt limit, in increments, by at least $2.1 trillion, in exchange for at least that amount in deficit reduction over the next 10 years.
The compromise immediately enacts 10-year discretionary spending caps generating nearly $1 trillion in deficit reduction, which affect both defense and non-defense programs, and increases the debt limit by $900 billion. Discretionary programs do not include programs such as Medicare, Medicaid and Social Security. But spending caps could affect programs that help people with Medicare, including programs created by the Older Americans Act. Other examples of discretionary spending include funding for the EPA, national parks and medical research.
In order to increase the debt limit a second time to avoid default, Congress must enact further deficit reduction of $1.2 to $1.5 trillion. To facilitate this, the compromise creates a bipartisan committee charged with finding the additional deficit reduction. The bipartisan committee may use all avenues to achieve this, and as a result could recommend changes to Medicare, Medicaid and Social Security. In the case of Medicare, the most problematic recommendations would be those that save the federal government money by shifting costs to people with Medicare or by limiting access to care. Such policies, which have been under consideration in past negotiations and proposals, include increasing the Medicare eligibility age, increasing Medicare premiums and other cost-sharing, and redesigning the Medicare benefit, including by limiting coverage provided by Medicare supplemental insurance. However, the committee may also recommend deficit reduction through increased revenues, which would avert the need for deeper cuts in spending that would significantly affect programs like Medicare and the population it serves.
In order to encourage both parties to come to a compromise through the committee process, the law triggers $1.2 trillion in across-the-board cuts if the committee fails to come to an agreement or Congress rejects the agreement. The trigger, sometimes called a sequester, exempts Medicaid, Social Security and certain other low-income programs. In addition, Medicare is for the most part excluded from automatic cuts, though Medicare provider payments could be decreased by up to 2 percent if the trigger were to take effect. According the Center on Budget and Policy Priorities (CBPP), this would result in a reduction of Medicare provider payments in 2013 of about $10 billion. Under the sequester, discretionary programs would be subject to a second round of cuts that would amount to $55 billion annually from 2013 to 2021.
Read Medicare Rights Center President Joe Baker’s statement on the passage of the debt ceiling deal.
Read CBPP’s paper “How the Potential Across-the-Board Cuts in the Debt Limit Deal Would Occur.”
Read the New York Times' Budget Control Act flow chart.
New Information Available on 2012 Part D Premiums
The average Medicare prescription drug benefit premium for 2012 will not increase, according to the Centers for Medicare & Medicaid Services (CMS). The Medicare prescription drug benefit, also known as Part D, is administered through private plans. Although premiums vary from plan to plan and region to region, in 2012 the average premium will remain around $30; in 2011, the average premium was $30.76. CMS also released information about income-related Part D premiums. Part D, as well as Part B, is currently means-tested, meaning individuals who have annual incomes over $85,000 per year pay increased premiums. The additional premiums are calculated on a sliding scale. For example, an individual making between $85,000 and $107,000 in 2012 will pay an additional $11.60 in extra premiums per month, whereas those earning greater than $214,000 will be required to pay an additional $66.40.
As part of the announcement, CMS also released new numbers for individuals who received discounts, enacted by the Affordable Care Act (ACA), during the Part D coverage gap. From January to June of 2011, almost 900,000 beneficiaries received discounts, amounting to $461 million total, or an average of $517 in savings per beneficiary. Other ACA benefits have also seen increases in utilization. For example, over 1 million people in Original Medicare have already taken advantage of the Annual Wellness Visit.
In other Part D news, CMS will in 2012 begin requiring pharmacies to provide notices to Medicare beneficiaries who are unable to fill prescriptions at the point of sale. These notices will outline how individuals can overcome drug denials to get the medications they need. Medicare Rights Center, along with fellow advocates such as the Center for Medicare Advocacy, submitted comments to CMS on the draft notice. While the notice is a step in the right direction, the comments suggest that CMS should take further action to create notices that are more individualized, and that provide beneficiaries with information on the specific reason that they were unable to fill a prescription.
Read the HHS press release on 2012 Part D premiums and coverage gap discount information.
Read CMS’s Part C and Part D announcement and guidance to plans.
Read Medicare Rights Center’s comments on the Part D pharmacy notice.
Medigaps are supplemental coverage policies designed to fill gaps in Original Medicare. It is a good idea to start researching Medigaps in your area well before you enroll in Medicare or lose other supplemental coverage, so that you will not have any gaps in coverage. Know that you may be subject to a waiting period before pre-existing conditions are covered by your Medigap policy. Depending on your situation, Medigap companies may refuse to sell you a policy based on your age or health status.
Generally, you can call your State Department of Insurance or your State Health Insurance Assistance Program (SHIP) for a list of Medigap companies in your state, and for help choosing a plan.
Most Medigap companies have agreements with Medicare to receive claims directly so that you do not have to submit claims yourself. Before you purchase the policy, be sure to ask the insurance company if it has a crossover arrangement with Medicare so that the Medigap automatically pays second.
Find your SHIP.
Learn more about Medigap policies at www.medicareinteractive.org.
Eliminating first-dollar coverage for Medigap policies would adversely affect Medicare beneficiaries, according to a Kaiser Health News op-ed article written by Medicare Rights Center Board Chairman Bruce Vladeck, PhD. Dr. Vladeck argues that increases in cost-sharing have long been shown to deter people from getting necessary care, and that such a policy change would disproportionately affect those with limited incomes.
Read the op-ed article.