5 Ways Obama’s Budget Can Alter Medicare
Key provisions in Obama's fiscal 2014 budget that would impact Medicare beneficiaries and providers
President Barack Obama's fiscal 2014 budget includes a variety of what he says are "manageable" changes for Medicare's 54 million beneficiaries as well as for the hospitals, nursing homes and other healthcare providers that serve them.
That assessment has drawn concern from some patient and provider groups that, although recognizing the need to address the nation's rising healthcare costs, say seniors shouldn't bear the brunt of efforts to reduce entitlement spending.
Obama's budget proposal, which would reduce the growth in Medicare spending by $371 billion over the next decade, asks wealthier beneficiaries to pay more for coverage and future retirees to pay higher copays for outpatient services such as doctor's visits and home healthcare. But the gap in Medicare's prescription drug coverage where beneficiaries cover all the costs - known as the "doughnut hole" - would close by 2015, five years faster than current law mandates.
The president's plan would eliminate the two percent payment cut Medicare providers began to feel earlier this month as part of the automatic across-the-board cuts known as "sequestration." But hospitals and other providers would see their reimbursements reduced. Drug makers would be required to pay higher rebates for drugs dispensed to Medicare's poorest beneficiaries.
Here are 5 key provisions in Obama's fiscal 2014 budget that would impact Medicare beneficiaries and providers.
Higher Cost Sharing for New Medicare Beneficiaries: In 2017, 2019 and 2021, new Medicare beneficiaries would have to pay an additional $25 for their Part B deductible, for a three-year total of $75 to be added on to the cost of the Part B premium, which in 2013 is $147. The administration says the change would "strengthen program financing and encourage beneficiaries to seek high-value health care services." Seniors advocates say it's an additional cost to people already struggling on fixed incomes.
Wealthier Beneficiaries Pay More: Current law already requires individual beneficiaries whose incomes are $85,000 and above ($170,000 and above for couples) to pay a larger share of Medicare Part B (outpatient services like doctor visits and laboratory services) and Part D (prescription drugs) premiums. Obama's plan would increase the lowest income-related premium to 40 percent and cap it at 90 percent. His plan would also maintain the current income thresholds until a quarter of Part B and Part D beneficiaries are paying the higher income-related premiums.
Doughnut Hole Closing Faster: Obama's budget plan would close by 2015 - instead of 2020 as mandated by the health law - the "doughnut hole," that gap in Medicare prescription drug coverage where seniors pay the full cost of prescriptions until they hit a catastrophic cap. This acceleration would be financed by increasing the current 50 percent discount that the drug makers give to beneficiaries in the "doughnut hole" to 75 percent starting in 2015.
Provider Cuts: Hospitals are none too happy about Obama's plans to cut their Medicare payments for bad debt and graduate medical education over the next decade. Hospital groups maintain that the cuts to bad debt reimbursement and medical education payments would weaken hospitals' ability to provide care and to train physicians, nurses and other health professionals.
What Obama Left Out: The president did not propose an increase in the Medicare eligibility age from 65 to 67, a savings mechanism favored by the GOP but assailed by some key Democrats. Nor did Obama propose combining the premiums beneficiaries pay for hospital care (Part A) and outpatient services (Part B). Some analysts wonder if these and other Medicare overhaul ideas could resurface as part of a larger discussion that includes overhauling the tax code and entitlements.
Mary Agnes Carey of Kaiser Health News has covered health reform and federal health policy for more than 15 years. Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization not affiliated with Kaiser Permanente.
