Medicare and Medicaid Recent Changes

¶ … Medicare and Medicaid

Recent changes in Medicare and Medicaid: An overview

The most notable effect of the 2010 Healthcare Reform Law may be its expansion of Medicaid coverage to a greater percentage of the working poor. About 45 million people under the age of 65 lack health insurance, 2/3rds of whom have incomes 200% below that of the federal poverty level (FAQ 2010, the New York Times). As well as making it easier to obtain Medicaid coverage, by 2014, the Law would increase the share of federal spending for the states for covering newly eligible people. "The federal government would pay all of the costs until 2016, 95% in 2017, 94% in 2018, 93% in 2019 and 90% thereafter. Some states that already insure childless adults under Medicaid would receive more federal money for covering that group through 2018" (Proposed changes in healthcare bill, 2010, the New York Times). The Healthcare Reform Law would also "increase Medicaid payment rates to primary care doctors to match Medicare payment rates, which are higher, in 2013 and 2014," to act as an incentive to treat low-income patients as well as the elderly (Proposed changes in healthcare bill, 2010, the New York Times).

According to the nonprofit Kaiser Family Forum, Medicare patients will also experience noticeable changes in their coverage. The bill will provide a $250 rebate for Medicare beneficiaries who lose prescription drug coverage as a result of the Part D coverage gap (otherwise known as the 'doughnut hole') and also extend a 50% discount on brand-name drugs to Medicare patients beginning in 2011. "By 2020, the government would pay to provide up to 75% discount on brand-name and generic drugs, eventually closing the coverage gap" (Proposed changes in healthcare bill, 2010, the New York Times).

But despite the efforts of the proposed legislation to close the 'doughnut hole' in Medicare of non-coverage for prescription drugs for the elderly, "an overwhelming majority of older voters chose Republican Congressional candidates in Tuesday's election. They were propelled in large part, we suspect, by distorted and inflammatory attack ads claiming that President Obama's health care reforms would 'gut' their Medicare coverage and implying that a Republican-controlled Congress would somehow rescue them" wrote the editors of the New York Times (Medicare and the Republicans, 2010, the New York Times ).

The fears of the elderly were rooted in the fact that the reforms would eliminate "the tax deductibility of the 28% federal subsidy, known as the retiree drug subsidy (RDS), for employers who provide creditable prescription drug coverage to Medicare beneficiaries, effective in 2013" (KFF, 2010). Thus, the 'gutting' feared by elderly Americans is the end of subsidies to private programs of elderly individuals with health coverage in addition to Medicare. The 2010 Healthcare Law also increases the Medicare payroll tax for individuals earning above $200,000 a year and establishes a new office within the Centers for Medicare & Medicaid Services (CMS) and the Federal Coordinated Health Care Office to "reduce annual market basket updates for inpatient hospital, home health, skilled nursing facility, hospice and other Medicare providers" (KFF, 2010).