The Washington Extension

September 23, 2011

Medicare News

The Obama Administration has recommended $320 billion in cuts to health care programs (pdf, p.35). The Medicare program is implicated by the following major policy proposals, almost all of which have been previously proposed and are roundly criticized by industry and consumer groups:

  • Impose a Part B premium surcharge equal to about 15% of Medigap premiums for new beneficiaries who purchase Medigap policies with “particularly low cost-sharing requirements”, starting in 2017
  • Impose $100 copayments for home health services (currently there is $0 copayment)
  • Increase the Part B deductible faster than currently projected
  • Increase the premiums that high-income Medicare beneficiaries pay
  • Drug companies pay rebates for drugs sold through Medicare Part D to low-income patients, similar to the current Medicaid rebate program
  • Cut funding from the public health fund created by the Affordable Care Act

As Extend Health has noted elsewhere, the Healthcare Leadership Council—comprised of health care industry leaders such as Pfizer, Aetna and the Mayo Clinic—proposed $410 billion in deficit reductions that they claim would also increase Medicare’s long-term solvency. The Medicare proposals include creating a “Medicare Exchange” where seniors can choose among private plans, increase the Medicare eligibility age to 67 from 65, cap annual out-of-pocket costs, and dramatically increase Medicare premiums for higher-income beneficiaries.

ACA Updates

The Federal government is increasingly looking to offer states options to share the responsibility of creating and running health insurance exchanges. The Center for Consumer Information and Insurance Oversight at Health and Human Services is proposing three options, including: 1) states managing health plan participation, 2) helping consumers navigate the system, or 3) both. Any of these options would leave the eligibility and enrollment processes to the Federal government.

New York State’s Republican-led Senate is blocking efforts by the state to pass a bill establishing a health insurance exchange. New York already received $39 million to begin establishing an exchange, but the Republicans’ refusal to take up the bill negotiated by lawmakers and Governor Cuomo is obstructing the state’s ability to seek additional Federal financing.

Michigan’s Republican governor, Rick Snyder, has recommended that the legislature pass a bill creating a non-profit health insurance exchange called MIHealth Marketplace. The exchange would be governed by a Board appointed by the governor, with an advisory panel comprised of representatives from small business, consumers, insurance plans, providers, agents and others.

The Blue Cross Blue Shield Association (BCBSA) is criticizing the Obama Administration for releasing regulations too slowly, and being too vague in those that are released. In particular, BCBSA alleges that the health insurance exchange regulations don’t have enough information about how the marketplaces will function, what will be the minimum requirements for plans in the exchanges, and the lack of information about selling insurance outside of exchanges.

Reports/Other News

A Mercer study finds that premiums for employer-based insurance coverage will rise 5.4% in 2012, the lowest growth in fifteen years. Survey respondents attribute this low growth to less utilization, due to a slow economy and cost-cutting benefit changes such as higher deductibles or cost sharing.

The National Council on Aging and UnitedHealthcare find that fewer than half of seniors understand Medicare well, and half describe their understanding of the Affordable Care Act as “poor”. Even among widely advertised ACA reforms, there is little understanding: less than 1/3 of seniors are aware that they will pay a discounted amount in the Part D ‘donut hole’. Finally, just over half of seniors say they have excellent or good knowledge about evaluating their Medicare options.

Visit Extend Health — the nation’s largest private Medicare exchange.

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