|Artwork by Norman Rockwell|
Friday, April 27, 2012
Is the PPACA killing Granny?
This is the third in a 5 part series on Medicare. Join "Health on the Horizon" on Facebook!
When the PPACA was passed, you heard all kinds of political rhetoric from massive cuts in medicare to “granny killings”. While “granny killings” were just outright ridiculous, the impact upon medicare is something to take seriously. After all, with the official retirement of the “baby boomers” in 2011, the rapidly aging population and a reduction of younger workers to support programs like social security and medicare, this was a reasonable concern. Furthermore according to the Kaiser Family Foundation, Medicare’s Insurance Trust Fund (Medicare Part A) is expected to become insolvent in 10-15 years.
So what does this mean to Pennsylvanians? Let’s simplify how the PPACA impacts medicare by categorizing into 3 basic points: (1) Basic Medicare benefits will remain the same but will be improved with the new access to free preventive care and reduction of the “donut hole”, (2) it implements instruments to reduce waste, fraud and abuse, with part of this being (3) a reduction of payments to Medicare Advantage.
Ah ha! That was it! That was the language that sparked the political rhetoric to claim that the PPACA was choking our seniors and possibly even killing your grandmother!
Ok, now back to reality. In fact, Medicare Advantage is NOT traditional Medicare at all. It arose out of a private insurance program that was developed in the 1970’s as an alternative to those eligible for Medicare. The original intention was for the private sector HMO/PPOs to provide health insurance at a lower cost. However, over the years they have resulted in the government paying more per enrollee than those on traditional Medicare. The government has actually been paying 9-13% higher for these plans.
Regardless, it is still an important concern because 25% of Americans and 38% of Pennsylvanians are on Medicare Advantage. According to Jean Friday, President for the Pennsylvania Alliance for Retired People, “many retirees in the western part of the state are very anxious about this piece of legislation. In the 1990’s many retirees lost their health care benefits and resorted to managed care plans for their coverage. Others were given the option to enroll in Medicare Advantage plans when their employer no longer offered traditional Medicare as an option.”
While this shifting of overpayments from Medicare Advantage to traditional Medicare will allow for the closure of the “donut hole”, the free preventive care and assist with the long-term solvency of the Medicare program, this isn’t a consolation to those possessing these plans. However, with the PPACA, some consumer protections have been strengthened for Medicare Advantage enrollees. One of the main ones is that like all other large and small group insurance plans, Medicare Advantage is now subject to Medical Loss Ratio. This will mean that 85% of the consumer’s premium dollars must now be spent on healthcare and not administrative costs, advertising, CEO bonuses and lobbying. This will also help in curtailing the future solvency of the Medicare Fund. Furthermore, the PPACA provides bonuses payments to Medicare Advantage plans based on quality ratings and limits the out of pocket costs or no more than $6700 for the consumer. Current enrollees have the option of switching plans during the open enrollment period.
Ms. Friday concluded that “In 2010 many politicians claimed the Healthcare Law would be bad for seniors, but here we are, two years later, and the facts do not look bad. Many have seen the benefits of the closing of the “donut hole” and access to preventive care. The evidence is in, the Healthcare Law has been and will continue to be good for Pennsylvania Seniors.”