Will Medicare Survive a Repeal or Reform of Obamacare?
We are hearing a lot of noise relative to the impact on Medicare if the GOP were to attempt to repeal or amend Obamacare. Much of this contains hype, scare tactics and half-truths, often with little useful information. One journalist has even suggested that any changes could have an “immediate impact on the solvency of Medicare”.
Let’s cut to the chase:
- The first bill aimed to “replace” Obamacare has already failed. It remains likely that some form of legislation will eventually move through Congress and be signed by the President.
- Obamacare, in its original form, had very little direct impact on Medicare. Some of the impact was:
- Obamacare was funded almost entirely by cuts to Medicare spending: reductions (at least to the rate of growth) to healthcare providers, and reduced payments made to Medicare Advantage insurers.
- Obamacare did add certain preventative care benefits to Medicare, and called for the elimination of the drug coverage gap (“donut hole”) by 2020.
- Some speculation:
In the likely event that some type of legislation is signed into law, its direct impact on Medicare should not be substantial. The cuts in Medicare spending that were part of the original Medicare have already been softened, and any further adjustment would likely benefit Medicare consumers (at least indirectly). It is difficult to imagine any bill calling for increased spending, and the long term solvency of Medicare is a real issue, so I believe we will see little impact here.
The preventative benefits were a nice addition which were provided at a modest cost. There is pretty wide consensus that this is a good thing, and both Democrats and Republicans understand their senior constituents vote. It’s hard to know what might get buried in what is likely 1,000 or more pages of legislation, but logic says this will not be a target.
The coverage gap or “donut hole” on pharmacy coverage under Part D has been a problem from inception. Again, it is hard to believe that any new legislation will make this worse.
Original Obamacare had only a modest impact on Medicare. The original legislation has already been modified in a number of ways and we will continue to see change, whether through some sort of repeal or a series of smaller changes. Some will impact Medicare beneficiaries, most will not.
There is no call to action at this time. Your plans are secure and likely to continue much as they have been. In the meantime, we are watching this closely and as more details emerge that may have an impact on our customers, we will keep you posted.