CHA Blog

Currently, there are multiple proposals in Congress, the Super Committee and the Administration, all of which will limit how much Medigap insurance will be able to pay in benefits as a way to address the current deficit. The thinking is that beneficiaries who don’t have enough “skin in the game,” i.e. beneficiaries who have supplemental coverage and don’t pay deductibles and copayments, end up using too many services, thus costing the Medicare program too much money. While there are no studies to support this thinking, and while the thinking doesn’t make sense, as Medicare will only cover those services it deems as reasonable and “medically necessary” anyway, the proposals are written as if this thinking is the truth.

Some of these proposals would apply retroactively, regardless of the serious legal issues this poses, and would prevent the payment of benefits people already have in Medigap plans (i.e. benefits that cover the Part A and B deductibles, coinsurance and copayments).  The National Association of Insurance Commissioners (NAIC) recently released a Discussion Draft reflecting the views of regulators, industry and consumer groups about the dangers of eliminating existing benefits and prohibiting Medigap plans from paying a newly proposed Medicare deductible and half of the copayments.

These proposals are not limited to Medigap. Congress is also trying to apply these prohibitions on benefits to retiree plans and to TriCare for Life.  Few Medicare beneficiaries know this is happening. We will be posting an article on these proposals and our views as an organization on them.

On Monday, the U.S. Supreme Court announced that it will review the legal challenges against the federal health reform law, the Affordable Care Act (ACA), in early spring 2012. While several different lawsuits challenging the law were presented to the justices, the court will only review the multistate lawsuit filed by 26 states and the National Federation of Independent Business.

Although the ACA provisions that affect Medicare have not been challenged, the discord over the law casts uncertainty over the stability of new Medicare benefits and beneficiary protections provided by the new law.  The issues the Supreme Court will consider are:

• Whether the controversial individual mandate is severable from the rest of the law or if the whole law, including the Medicare provisions, must be overturned if one provision is found unconstitutional;
• Whether Congress may require states to expand their Medicaid programs by withholding funds from states if they do not;
• Whether Congress was acting within its power to require Americans to buy health insurance or pay a penalty; and
• Whether parties have legal standing to challenge the individual mandate requiring health coverage since that provision is not yet in effect.

“Many Medicare beneficiaries have already benefited from the Medicare provisions in the ACA,” said Elaine Wong Eakin, Executive Director of California Health Advocates.  “These new Medicare benefits were hard-won, and it would be a shame to lose them should the Supreme Court find the whole law unconstitutional because of one provision.”  The Medicare improvements include discounts for beneficiaries in the Part D prescription drug “donut hole,” better access to preventive services, and an annual out-of-pocket cap for beneficiaries in Medicare Advantage plans.  Furthermore, the ACA incorporated cost-savings to sustain the Medicare program, and these cost-savings would be lost should the whole law be overturned.

Even if the Supreme Court upholds the ACA, the Medicare program is targeted for cuts.  “As lawmakers find ways to cut the federal deficit, they should pay more attention to the cost-saving measures in the ACA,” recommended Wong Eakin.  The ACA introduced initiatives to control costs as well as improve care that results in better health outcomes for the population.  Instead of focusing on cutting Medicare benefits and increasing beneficiary out-of-pocket costs, lawmakers should build on the ACA initiatives.

For more information on the health reform law, see our newsletter and other blog articles on this topic, including those listed below:

• 50% Discount on Part D Brand Name Drugs Continues for 2012; 14% Discount on Generics
• What Does Health Reform Mean for Medicare Beneficiaries? Summary of Key Provisions
• Learn How Health Care Reform May Affect You in 2011
• Health Reform Gives Some Immediate Benefits for Californians

As a way to reward Medicare Advantage (MA) and Part D plans that receive high performance ratings by the Centers for Medicare and Medicaid Services (CMS), and to guide beneficiaries toward such plans, there will be a new Special Election Period (SEP) allowing Medicare beneficiaries to enroll in MA and Part D plans that receive an overall 5-star rating by CMS’s Plan Performance Rating system. This right will start on December 8, 2011 and ends November 30, 2012.  The 5-Star SEP can only be exercised once per year.  Plan ratings for 2012 are available now on Medicare.gov’s Plan Finder Tool.

Very few plans in 2011 achieved 5-star status. In California, no stand-alone Part D plans achieved this status. Kaiser’s Senior Advantage HMO plan in several counties is the only MA plan that received a 5-star rating.

Note that using the 5-Star SEP does not guarantee Part D coverage. If a beneficiary in either an MA-PD plan or a PDP chooses to enroll in an MA-only plan with a 5-star overall rating, that beneficiary would lose Part D coverage and must wait for a subsequent enrollment period to obtain Part D coverage (such as the Annual Election Period from Oct 15 – Dec 7 each year). Late enrollment penalties might also apply.

Here’s a summary of the star ratings for the PDPs in California:

Medicare costs for 2012 are out, and for the most part, Part B cost-sharing will be less than projected for all beneficiaries in 2012. The Part B deductible will decrease by $22 in 2012, from $162 per year in 2011 to $140 in 2012. In addition, the Part B monthly premium will only slightly increase for those beneficiaries who have not had an increase in the last 2 years. The 3.6% cost-of-living increase for Social Security recipients in 2012 will cause the Part B premium to increase by just $3.50 – from $96.40 in 2011 to $99.90 in 2012. Beneficiaries who were new to Medicare in 2011, however, have been paying $115.40 for their Part B premium. For them, the 2012 premium will actually decrease by $15.50.

These Part B premium reductions directly relate to the slower growth in Part B expenses, due in part to health care reform. The Affordable Care Act’s lower payment rates, reduced payments to private Medicare plans, and increased efforts to fight fraud and abuse all contribute to this trend. Health care reform has also increased Medicare’s value by reducing beneficiary costs for prescription drugs, adding preventive care coverage, and eliminating cost-sharing for most preventive services.

For detailed information on all 2012 Medicare Part A and B cost-sharing, see our fact sheets:

• Original Medicare: An Overview
• 2012 Premiums, Coinsurance & Deductibles (Original Fee-for-Service Medicare)

You can also read the Center for Medicare and Medicaid Services (CMS) fact sheet, Medicare Premiums and Deductibles for 2012.