Obama Administration Releases Deficit-Reduction Recommendations
The Obama Administration released its recommendations this week to the Joint Select Committee on Deficit Reduction, also known as the supercommittee, to cut the deficit by approximately $3 trillion through a mix of revenue increases and spending cuts. The recommendations contain changes to Medicare benefits, but the president made a specific commitment to veto any package that did not contain meaningful revenues, such as elimination of tax breaks for corporations and for those with higher incomes.
The plan saves an estimated $224 billion from Medicare. The majority of proposals that affect Medicare generate savings through altering payments to Medicare providers and requiring drug companies to provide drugs at lower costs to the Medicare program. One proposal, modeled after the Medicaid program, would require drug manufacturers to provide rebates for drugs used by Medicare beneficiaries who qualify for the low-income subsidy program (LIS). According to the plan, enacting these Medicaid-style rebates would achieve $135 billion in savings.
However, some components of the plan are troublesome. About $24 billion in savings are the result of policies that would require people with Medicare, half of whom have incomes below $22,000 per year, to pay more out of pocket for coverage and care, which would not affect current beneficiaries but would affect new beneficiaries beginning in 2017. For example, the plan recommends a Part B premium surcharge of 15 percent of the average Medigap premium, for those with Medicare who purchase Medigap plans that offer comprehensive coverage of cost-sharing. In addition, the plan increases the Part B deductible in $25 dollar increments beginning in 2017, again in 2019, and lastly in 2021. Furthermore, while there is currently no cost-sharing for home health care, the plan proposes a $100 copay per episode of home care that is not preceded by a hospitalization. Lastly, the plan would further means-test Medicare Part B and Part D by increasing the premiums higher-income people with Medicare pay.
Read “The President’s Plan for Economic Growth and Deficit Reduction.” (For health savings, see pages 35 to 43.)
Read Medicare Rights Center President Joe Baker’s statement on President Obama’s deficit-reduction plan.
Doughnut Hole Inhibits Access to Prescription Drugs
People who reach the Medicare prescription drug coverage gap, also known as the doughnut hole, reduce their drug intake or stop taking their drugs altogether as a result, according to a new report released by the Kaiser Family Foundation this month. The report, titled “Understanding the Effects of the Medicare Part D Coverage Gap in 2008 and 2009,” analyzed drug claims data to examine the affect of the coverage gap on Medicare beneficiaries. According to the report, over 3 million people with Medicare reached the coverage gap in 2009, and in general beneficiaries suffering from certain conditions, including breast cancer and Alzheimer’s disease, are more likely to reach it. In addition, those who reach the gap in one year are more likely to reach the coverage gap in following years, and they generally face highly fluctuating drug costs throughout the year.
Before the passage of the Affordable Care Act (the ACA), people with Medicare who reached the coverage gap were responsible for paying the full costs of their prescription drugs out of pocket. However, the ACA gradually phases out the coverage gap through 2020, when beneficiaries’ share of drug costs will reach a standard level of 25 percent. Medicare beneficiaries who reach the coverage gap in 2012 will receive a 50 percent discount on brand-name drugs and a 14 percent discount on generic drugs, an increase from the 7 percent discount on generic drugs in 2011.
The Medicare Rights Center has created a new doughnut hole fact sheet to reflect changes in 2012. The coverage gap begins in 2012 when beneficiaries reach $2,930 in total drug costs, which includes both what the beneficiary and plan pays, for drugs covered by their plan. The coverage gap ends when total drugs costs reach $6,657.50. The amount the beneficiary pays for all drugs and the amount covered by the 50 percent discount on brand-name drugs count toward the total drug costs needed to get out of the doughnut hole and into catastrophic coverage. The amount covered by the 14 percent discount on generic drugs does not count toward getting out of the doughnut hole.
Read Kaiser Family Foundation’s report “Understanding the Effects of the Medicare Part D Coverage Gap in 2008 and 2009.”
Read Medicare Rights Center’s fact sheet, “Health Reform and Medicare: The Doughnut Hole in 2012.”
Read Medicare Rights Center’s fact sheet, “Health Reform and Medicare: Closing the Doughnut Hole.”
The Annual Notice of Change (ANOC) is a notice your Medicare Advantage (MA) plan or Medicare Prescription Drug plan (PDP) sends you every year. The ANOC explains how your plan’s coverage and costs are changing for next year. Your plan must make sure you get your ANOC in the mail by September 30. It is very important that you read your ANOC and consider all of your options, since many plans make changes every year, and your current plan may not be your best choice for 2012. Your ANOC comes at the end of September so you can determine whether it is best to keep or change your plan for next year during the Fall Open Enrollment Period (October 15 to December 7).
Learn more about reviewing your PDP, and learn what questions to ask before joining an MA plan, at www.medicareinteractive.org.
The 2012 edition of “Medicare & You,” the official Medicare handbook, is now available online. Among other topics, the handbook covers Medicare basics, Medicare coverage, and what’s new in 2012.
Read “Medicare & You.”