Experts say if the Affordable Care Act (ACA) is invalidated or repealed, “it would be devastating for Medicare.” But how exactly could Medicare alter due to the repeal of ACA? We broke it down for you here.
Background of the Affordable Care Act
Affordable Care Act is a comprehensive health care reform law enacted in March 2010 (sometimes known as ACA or “Obamacare”).
The law’s 3 goals:
- Make health insurance more affordable and available to more people. The law provides consumers with subsidies (premium tax credits) that lower costs for households with incomes between 100 percent and 400 percent of the federal poverty level.
- Expand the Medicaid program to cover all adults with income below 138 percent of the federal poverty level. (Not all states have expanded their Medicaid programs, as of yet.)
- Support innovative medical care delivery methods designed to lower the costs of health care generally.
Experts commented on the potential Medicare crisis:
“If the ACA was repealed or rescinded in full, it would be devastating for Medicare,” said David Lipschutz, associate director of the Center for Medicare Advocacy. “Many of the law’s provisions that strengthen the program’s fiscal solvency also strengthen consumer protections for beneficiaries.”
“The ACA’s changes are so ingrained in the program that people don’t remember what Medicare was like before the law,” said Casey Schwarz, senior counsel for education and federal policy at the Medicare Rights Center. “Without the ACA, the doughnut hole for prescription drug coverage, which closed in 2020, reopens, and “the expansion of preventive care services goes away.”
Supreme Court Justice Ruth Bader Ginsburg’s death heightened the stakes in a case scheduled to appear before the court today, November 10, that could reverse the improvements to Medicare, as well as raise out-of-pocket costs for beneficiaries.
The case, California v. Texas, which was filed by 20 Republican-leaning states, challenges whether the Affordable Care Act can exist without the individual mandate to buy health insurance.
Here are the top five possible outcomes for Medicare if ACA is repealed:
The “Donut Hole” could return
Since 2011 the ACA has been steadily closing the prescription drug coverage gap, known as the “donut hole,” in Medicare Part D by requiring drug manufacturers and insurers to pick up more of the cost.
The donut hole was finally closed this year with seniors paying 25 percent of the cost for both generic and brand-name medications and manufacturers picking up 70 percent of the tab, with insurance taking care of the remaining 5 percent. Before the ACA, seniors paid 100 percent of prescription drug expenses while in the donut hole.
Medicare preventive care could no longer be free
With the ACA, there is no copayment or deductible for potentially life-saving screenings for cancer, diabetes, heart disease, and other illnesses. Flu shots and annual wellness visits are also free. According to the National Committee to Preserve Social Security and Medicare (NCPSSM), before ACA, beneficiaries had to pay 20 percent of the cost for most preventive care services.
Medicare Advantage Plans won’t be as advantageous
The ACA requires Medicare Advantage plans to spend 85 percent of premium dollars on healthcare, nonprofits, or overhead. The plans also can’t charge more than traditional Medicare for chemotherapy, renal dialysis, skilled nursing care, and other specialized services. (Note: At the beginning of 2021, Advantage plans must accept enrollees with end-stage renal disease.)
Those restrictions dramatically lowered costs for plan participants since the ACA became law in 2010 and enticed more Medicare beneficiaries to enroll in Advantage plans. Over the last decade, the average Medicare Advantage premium has plummeted 43 percent while enrollment soared 117 percent, according to the NCPSSM.
Medicare insolvency could accelerate
The amicus brief filed by the Center for Medicare Advocacy found that the ACA extended the solvency of the program’s trust fund by eight years to 2026, mostly by finding new sources of revenue and slowing the growth of payments to all providers.
The Congressional Budget Office estimates that reversing those changes would cost the program $700 billion over 10 years. “Medicare would face almost immediate insolvency,” predicts the Senior Citizens League in a report.
Medicare premiums and Medicare deductibles could rise faster
Curbing provider payments also lowered costs for seniors, helping to keep Medicare Part A deductibles and copayments in check. Similarly, Part B premiums and deductibles are much lower than projected before the ACA became law.
From 2011 to 2020, Part B premiums increased by 23 percent. From 2000 to 2009, nine years before the ACA, Part B premiums rose almost five times faster (112 percent over) that period.
Medicaid also affected
It should be added that overturning the ACA would eliminate a Medicaid coverage pathway and federal Medicaid financing for millions of people. States would be able to expand coverage to parents under pre-ACA eligibility pathways, but they would not receive any enhanced matching funds for this coverage. Lastly, an overturning of the ACA would take away the option for states that have not expanded to do so in the future.