New Health Care Changes on the Horizon for Seniors on Medicare

Nov. 17, 2010— -- The Medicare open enrollment period kicked off this Monday and seniors can expect to see significant changes in their plans as the new health care law takes shape.

Elderly Americans were among the leading opponents of the health care bill and, according to a Kaiser Family Foundation poll conducted earlier this month, the majority of Americans 65 and older still don't know what the new law means for them.

The poll found that 57 percent of seniors were confused by the law, the highest of any age group.

Although a quarter of the population wants the law repealed, according to the survey, most provisions designed for the elderly remain popular.

The biggest benefit to Medicare beneficiaries is that the law will eventually close the prescription drug coverage "doughnut hole," the out-of-pocket expenses seniors have to incur once they're medicinal costs reach $2,830.

Seniors who fell into the gap this year received a $250 rebate check. In 2011, pharmaceutical companies will begin providing a 50 percent discount on brand-name drugs and the "doughnut hole" will eventually be phased out so that enrollees in Medicare Part D drug coverage program will only be responsible for 25 percent of their prescription drug costs by 2020.

The law also eliminates co-payments for preventative screenings such as mammograms and cancer screenings, and makes bonus payments to professionals who have high-quality ratings.

But some provisions in the law have irked some, including one that would increase Medicare payroll taxes on earnings for Americans with higher incomes.

Individuals who make $85,000 or more or couples with an income of at least $170,000 would have to pay higher premiums, starting in 2011. And the federal premium subsidy will be cut to 74.5 percent, depending on a person's income.

Another provision that has taken heat is one that would effectively reduce Medicare Advantage plans that give enrollees the option to receive their benefits from private health care providers.

The greatest impact of that change will be felt in rural areas, where seniors have limited options for health coverage and services, said Mary Grealy, president of the Healthcare Leadership Council, a health care policy group.

The new law also consolidates health care plans, but seniors still have many options from which to choose.

Within each state, there are a minimum of 28 available plans and the average cost nationally is $40 per month, Grealy said.

With 2010 coming to a close, Americans can expect to see more new provisions of the health care law roll out. But the future of the law remains uncertain, with new members of Congress vowing to repeal and replace parts of the legislation.

Partisan Tug of War

Medicare has been a hot button issue since the start of the health care debate.

Seniors turned up in large numbers at town hall meetings last year to fight against cutting Medicare services. Even during the 2010 election cycle, opponents of the bill charged that the Democrats' health care law would cut billions from Medicare and hurt seniors' care, a charge that wasn't completely true.

Programs for seniors account for some of the biggest expenses for the federal government. Spending on Social Security and mandatory programs such as Medicare and Medicaid make up 40 percent of the federal budget, according to Kaiser, and it's expected to grow from 10 percent of the Gross Domestic Product today to 16 percent in 25 years.

The partisan tug of war over Medicare, Kaiser's president Drew Altman said, is that "Democrats will resist cuts in these programs and Republicans will resist any new taxes."

"These choices are also hard on legitimate policy grounds, especially when it comes to Medicare. And the most important reason they are hard is that so many seniors and disabled people on Medicare have low incomes and already pay a significant share of those incomes for their health care today," Altman wrote in an essay. "It will be difficult if not impossible to ask the majority of beneficiaries to pay more or make do with less."

Medicare also faces many other challenges, outside of the changes mandated by the new health care law.

Every few months, Congress has to work around cuts for Medicare providers. The system, set up two decades ago, was designed to control costs and while both Democrats and Republicans have historically agreed to not let them move forward, some doctors are afraid that the lame-duck Congress may end up in a partisan tangle.

Medicare payments would be cut by 23 percent if Congress does not act by Dec. 1.