Q+A: How does healthcare overhaul affect Medicare?

WASHINGTON Mon Mar 22, 2010 8:16am EDT

WASHINGTON (Reuters) - The sweeping healthcare overhaul the House of Representatives approved on Sunday includes about $455 billion in spending cuts for Medicare and other federal health programs over the next 10 years.

Here are some questions and answers about how the reforms will affect the Medicare healthcare program for the elderly.

WILL THE LEGISLATION CUT MEDICARE BENEFITS?

There are no cuts to the traditional Medicare benefit. The lion's share of spending cuts are in Medicare Advantage -- a program that uses private firms such as Humana and UnitedHealth Group to deliver Medicare benefits. Many of these providers offer extra coverage and some of those extras could be dropped as Medicare Advantage subsidies are bought more in line with the cost of traditional Medicare benefits. Medicare Advantage payment rates will be frozen in 2011 and then gradually reduced giving companies time to adjust to the changes.

ARE THERE ANY MEDICARE BENEFIT CHANGES IN THE BILL?

Yes. Medicare will begin paying for annual wellness visits and increase reimbursements for primary care physicians. Currently Medicare only pays for a general checkup when someone first enters the program and many health analysts believe regular check ups would help improve the overall health of elderly people and provide for better coordination of care.

Also the bill provides for an improvement in the Medicare prescription drug program. The current program includes a significant coverage gap that the legislation will eventually close. Currently people fall into this so-called doughnut hole falls after a total $2,700 is spent on drugs. Coverage begins again after $6,154 is spent.

In 2010, people who fall into the doughnut hole will get a $250 rebate. In 2011, they will get a 50 percent discount on brand-name drugs. By 2020, the doughnut hole will have been closed and 75 percent of drug costs will be covered.

HOW DOES MEDICARE ACHIEVE OTHER SAVINGS?

The legislation aims to capture productivity savings in the health system to save Medicare money.

Studies have shown huge cost variations in different parts of the country with little difference in health outcomes. The legislation provides for Medicare to test payment systems that are thought to promote better coordination and efficiency of care while maintaining or improving the quality of care.

Lawmakers hope the program will save billions of dollars by avoiding duplication of services and by providing better coordination of care for people with chronic conditions. The main aim of these delivery system reforms is to reward a quality of care rather than a quantity of services.

The bill also establishes an independent payment advisory board that will make recommendations on how to save money in Medicare and extend the financial solvency of the program.

The bill also provides more money to fight Medicare fraud.

WHAT HAPPENS ON THE MEDICARE PAYROLL TAX?

Most taxpayers will not pay the higher Medicare payroll tax. The bill calls for raising the tax to 2.35 percent from the current 1.45 percent for individuals earning $200,000 or more and for couples earning $250,000 or more. The legislation would also apply the tax to some investment income for those high-income groups.

(Reporting by Donna Smith; Editing by Deborah Charles)

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Comments (5)
Story_Burn wrote:
The Senate is going to put up a much tougher fight…I hope

Mar 21, 2010 11:00pm EDT  --  Report as abuse
Cicero-CA wrote:
Reuters needs to mention that the cardiologists will receive a 42% reduction in reimbursements for Medicare services rendered. Which means, some of these doctors will either retire, or, display a banner “medicare not accepted for payments – cash only please”

Mar 22, 2010 2:20pm EDT  --  Report as abuse
heariam wrote:
looks like better care and not having to double and triple take tests for every Doctor my Doctor sends me to. I have had to do this several times in the last 3 years, instead of getting the results from my Doctor the others told me they want their own records of my tests. My Doctor sends all of my records online or by email to any other Doctor that I as him to. It is a waist of my time and a waist of money for me to retake tests all the time. Hopefully this will stop.
I am disabled and have trouble getting to the Doctor and don’t just go for every sniff or sneeze but if I need to go for something serious then I go and if he wants me to see someone else then I dont’ hesitate to go. Medicare and Medicaid has always been good health care and I do not abuse it. I get a detailed report of all visits and check them to see that nothing is charged that I did not recieve. This is a good service and people need to stop knocking it and scaring people into thinking that it is not good. And that these services are out to let us die. My family knows my wishes about the care I would not want to have when it comes time for me to go. Everyone no matter how old or how young should have this talk with their family , it is only common sense..

Mar 22, 2010 7:18pm EDT  --  Report as abuse
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