Today, around 14.4 million seniors and disabled people, 28 percent of all Medicare beneficiaries, are in Medicare Advantage, the most ever. Anyone on these plans should know that the Affordable Care Act also known as Obama care will have a negative impact on Medicare Advantage plans. The negative impact will on the Medicare Advantage plans is an increase of cost for health care, and possibly lose some of the services these plans offer now. This year there will be approximately $11 billion in budget cuts for the program, but is estimated by 2019, those budget cuts will escalate to $200 billion or more. The $200 billion will consist of approximately $136 billion in direct program funding cuts and $70 billion in indirect cuts. In addition to the cuts in funding, the ACA will impose a new health insurance tax that will affect Medicare Advantage beneficiaries.
Facing anticipated reductions in funding and regulatory changes under the health care reform law, several of the nation's largest health insurers have indicated plans to scale back their Medicare Advantage programs. Beginning in 2014, insurers' Medicare Advantage plans will be held to a minimum medical-loss ratio of 85% under the Patient Protection and Affordable Care Act. The reform law also calls for a $156 billion reduction in Medicare Advantage payments by 2022. Those cuts, coupled with the 2% overall reduction in Medicare spending under the Budget Control Act of 2011 and potential further cuts resulting from ongoing budget negotiations in Congress, prompted senior executives at several leading health insurers to outline planned withdrawals from certain Medicare Advantage markets and narrowed Medicare benefit plan offerings.
Enrollment in health plans offered on the marketplaces, also called exchanges, begins Oct. 1 and runs for six months. Meanwhile, the two-month sign-up period for private health plans for millions of Medicare beneficiaries begins Oct. 15. In that time, seniors can shop for a private health plan known as Medicare Advantage, pick a drug insurance policy or buy a supplemental Medigap plan. In about half the states, some Medicare beneficiaries who also qualify for Medicaid may be choosing private managed care plans. Because many of the same insurance companies offering coverage for seniors will also sell and advertise policies in the marketplaces, seniors may have a hard time figuring out which options are for them. In addition, since the Affordable Care Act calls for less spending on Medicare Advantage, seniors will soon open up their mail to the bad news that their Medicare Advantage Plan has been changed in a negative way because of Obamacare. Many seniors on Medicare Advantage are on these plans, because not only do seniors have access to good doctors, but they actually will pick seniors up from home because they can’t drive and take them to their doctor’s appointments. This is a helpful benefit for many seniors, one that may be on the chopping block.
Since the 1970s, Medicare beneficiaries have been able to receive benefits through either original Medicare, the fee-for-service system run by the government, or private plans, mostly managed care plans financed by the government, but run mainly by insurance companies. These have been called Medicare Advantage plans since 2003. Advantage plans are required to offer basic health benefits that are at least as rich as original Medicare. But many offer extras, such as rebates on premiums, routine dental care, gym memberships and rides to the doctor, in order to compete for business. Medicare Advantage members pay premiums just like people who get their benefits through original Medicare. The private companies turn a profit depending in part on how well they manage costs of care.
The government spends more per person, which is 7 percent more last year for Advantage beneficiaries compared with those in original Medicare. The Affordable Care Act aims to gradually bring costs of the two programs in line. At the same time, it seeks to reward private insurers that offer the best care. The government bringing the cost of the two programs in line creates cuts and those cuts will be in the Medicare Advantage Plans. President Obama guaranteed with the new health care law individuals would be able to keep their insurance plans and doctors. The beginning of 2013 has shown this to not be the case. Many individuals insurance plans have changed from co pay to a deductible, and individuals have lost their doctor because of the change in the insurance plans. There is a warning in this, because seniors Obamacare will increase the cost to you on the Medicare Advantage Plans, while decreasing the benefits of the plan like obtaining a ride to your doctor’s appointments if you cannot drive.