How does Obamacare affect Medigap?
Obamacare is not expected to negatively affect Medicare Supplement insurance, but it will have both positive and negative effects on the Medicare program.
The Affordable Care Act (ACA), commonly referred to as Obamacare, was passed in 2010 to remodel health care in the United States. Although it primarily changed private insurance, it did make some changes to the Medicare program.
The ACA requires that the National Association of Insurance Commissioners (NAIC) review certain Medigap plan options to see if any changes need to be made. In the end, the NAIC did not recommend any Medigap updates.
Impact on Medicare Supplement insurance
The ACA did not make any actual changes to Medicare Supplement insurance plans, although the ACA included a provision that could have affected the benefits for Medigap Plans C and F.
The ACA mandated a full review of Plans C and F to ensure that physicians’ services are not being abused. The ACA required that the NAIC review Plans C and F and decide if introducing cost-sharing to the plans would “encourage the use of appropriate physicians’ services under Medicare Part B.”
The NAIC responded in late 2012 stating that they were “unable to find evidence in peer-reviewed studies or managed care practices” that adding cost-sharing to Plans C and F would lead to more appropriate use of physicians’ services. The NAIC recommended that no cost-sharing aspects be added to Plans C and F. This was later approved and no changes were made to those 2 plans.
The ACA did not require any additional changes to Medigap plans.
Effect on Original Medicare
Despite the lack of changes to Medicare Supplement insurance plans, there were larger changes to Original Medicare. The ACA made several large-scale changes to the Medicare program that improved coverage and reduced overall costs for Medicare beneficiaries. The coverage for individuals that are enrolled in Medicare should not be threatened. In fact, it may improve.
According to Medicare.gov, the ACA created 5 main changes to the Medicare program, including the following:
- Adding free preventative services
- Reducing prescription drug costs
- Reducing overall enrollee costs
- Launching programs to reduce fraud
- Extending future Medicare funding
Free preventative care
The ACA requires health plans to provide more preventative care. Medicare Part B now includes more preventative services such as mammograms, screenings, and a free yearly wellness visit with no Part B co-insurance or deductible.
Cutting prescription drug costs
For those who enroll in Medicare Part D, prescription drug costs also should go down as the Part D “donut hole” is gradually reduced through a provision of the ACA. The “donut hole” is a coverage gap that occurs if you and your drug plan spend over a certain amount on prescription drugs each year. The ACA requires that anyone who reaches the “donut hole” must receive a $250 rebate. The ACA also mandates a gradual decrease in cost for prescriptions purchased in the “donut hole.” The “donut hole” will be gradually reduced between 2014 and 2020, but will have different reduction rates for generic and brand-name drugs.
Reducing enrollee costs
The third change to Medicare was a reduction in enrollee costs. Those enrolled in Original Medicare will save an estimated $59.4 billion through 2016 due to a reduction in out-of-pocket costs and lower premiums, according to CMS and a report by the HHS Assistant Secretary for Planning and Evaluation. The reduction in costs comes from multiple provisions such as expanded benefits and an adjustment to premium subsidies.
The fourth change is the inclusion of fraud reduction measures in the Medicare program. The anticipated reduction in fraud is expected to lead to lower costs for both taxpayers and beneficiaries.
The final change resulting from the ACA is a guarantee that the Medicare program will have sufficient funding until at least 2029. The law extended the Medicare trust fund 12 years due to savings from anticipated reduced fraud and waste and an overall reduction in total program costs.