Millions of Americans are benefiting from the Affordable Care Act. And yet it remains unpopular, even among seniors, many of whom have been seeing tangible benefits since the law passed in 2010.
According to the June Kaiser Health Tracking Poll, 47 percent of seniors have an unfavorable view of the law. That's down from an all-time high of 59 percent in 2011, but still close to a majority.
That poll number arrives along with some positive news - the slowing of Medicare spending, at least in part because of the ACA. That development might have been overlooked because of events here at home and around the world.
With all of that in mind, perhaps it's worth taking another look at the impact of the ACA on seniors.
Since the passage of the ACA, seniors have been the beneficiaries of free annual wellness visits, and they now have access to 17 preventive health services with limited or no out-of-pocket cost. For seniors who find themselves in the Medicare Part D "donut hole," out-of-pocket costs are getting lower every year. In 2014, those in the donut hole will pay only about 47 percent of the cost of brand-name drugs and 72 percent of the cost of generics; before the ACA, seniors in the donut hole paid full price. By 2020, the donut hole will essentially be eliminated.
From a policy point of view, the biggest news is that Medicare spending has temporarily slowed. And it has slowed significantly. Prior to the ACA, Medicare was projected to become insolvent by 2016. The latest report from the Medicare board of trustees has extended that to 2030. An extra 14 years of solvency is clearly a positive sign for beneficiaries, as well as federal policy-makers and bean-counters.
In particular, per capita Medicare spending is down. Since 2009, total per-person spending has grown only 0.8 percent. That's much slower that the 3.1 percent growth rate in the rest of the economy. Between 2011 and 2015, Medicare hospital spending is projected to drop by almost $400 per beneficiary. In 2013, the program covered the hospital costs of an additional 1.6 million seniors for $600 million less than we spent on all Medicare hospitalization the year before.
The reasons for this spending drop are still unclear, but there are some likely candidates. The first is the Affordable Care Act. The law substantially reduced payments to hospitals and other care providers, which in 2013 accounted for almost 40 percent of total Medicare benefit spending. Payments were also reduced for insurance companies that offer Medicare Advantage (MA) plans. MA payments represented 25 percent of all Medicare benefit spending, and prior to the ACA they averaged $1,280 more per enrollee than traditional Medicare. That was unsustainable.
The second policy reason is the congressional "sequester," which implemented a 2 percent across-the-board payment reduction to Medicare providers and plans. Created by the Budget Control Act of 2011 (and not the ACA), those cuts were introduced in 2013 and will reduce spending by $123 billion through 2021.
The ACA also included a number of delivery-system reforms, such as accountable care organizations, medical homes, bundled payments and value-based purchasing, all of which have the potential to reduce long-term spending. The law also increased penalties for avoidable hospital readmissions, and as a result, readmissions dropped by 130,000 between January 2011 and August 2013.
Other possibilities for the spending drop include an influx of new and younger beneficiaries from the baby boomer population and industry innovations in care delivery.
As the baby boomer population ages, however, overall spending will begin to increase again, even if per-person costs remain lower. That greater demand will drive up spending, and sooner or later, Medicare spending will once again grow faster than the economy.
One big concern for seniors was the impact of payment cuts to Medicare Advantage plans. There were cuts in 2012 and 2013, but this year MA payments will increase by 3.3 percent, and there are no cuts scheduled for 2015. Taken together, the impact of overall spending cuts on MA plans has been limited. Nearly all beneficiaries (99 percent) still have access to an MA plan, enrollment has increased by 30 percent, premium increases on average are very small and insurers' total revenues have increased on average by 29 percent.
The downside for MA policyholders is the impact on provider networks - the doctors, clinics, hospitals and others that provide care. The biggest overhead cost for insurance companies is the direct cost of health care, so they frequently adjust or reduce networks in order to better manage costs and profits. UnitedHeathcare, one of the leading MA plan providers, has trimmed 30,000 doctors from its networks over the past two years, and its current goal is to reduce the number of providers by 10 to 15 percent over last year.
All of this has spawned new regulations from the Centers for Medicare and Medicaid Services, lawsuits and the wrath of the American Medical Association, which considers the provider terminations to be "without cause." Under new federal regulations, carriers are not required to maintain provider networks, but they have to notify policyholders 60 days in advance of any network changes as well as all available alternatives. If an insurance company drops a provider, the policyholder can sign up with a new doctor, move to a network that has their old doctor, or drop MA coverage altogether and return to traditional Medicare, which does not have provider networks.
Another concern for many seniors who oppose the ACA is the Independent Payment Advisory Board, or IPAB. It is designed to make recommendations to reduce Medicare spending - and was misleadingly labeled a "death panel" by opponents of the ACA. In fact, this panel was to be appointed by the president and approved by the Senate and would be called into action only if Medicare spending was not kept under a targeted threshold. Since Medicare spending is far below the ACA's target, the board has not been convened.
Finally, the "Elder Justice Act" provision of the ACA, which was designed to help fight against financial and physical elder abuse, has run been caught in partisan battles over the budget and the health care law. Even though the act has been signed into law, it has not been funded by Congress, and the vast majority of its reforms have not been implemented.
The unpopularity of the law may be explained by party partisanship, a lack of understanding about what the law actually does or because of unintended consequences like provider network changes that negatively affect some seniors.
To review, Medicare has an additional lease on life financially, and spending is significantly down. Beneficiaries have access to new and popular benefits. The donut hole is closing. The Independent Payment Advisory Board may never get appointed. And while provider networks are being significantly cut by some carriers, Medicare Advantage plans are still available, affordable and enrollment is up.
Taking a second look, a lot of seniors are seeing advantages when it comes to their health care, and the Affordable Care Act has something to do with that.