California Health Advocates

What Does Health Care Reform Legislation Mean for Medicare Beneficiaries?

California Health Advocates > Health Care Reform > What Does Health Care Reform Legislation Mean for Medicare Beneficiaries?

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Below is a brief summary of some of the main changes the recently passed health care reform will bring for Medicare beneficiaries.

  1. The Medicare Part D “donut hole” – or coverage gap where beneficiaries must cover 100% of their drug costs – will go away by 2020. Beneficiaries with Part D will gradually pay less until they are responsible for 25% of their drug costs (or costs above their deductible and below the catastrophic limit). This means as of 2020, 75% of brand-name and generic drug costs will be covered by Part D. Starting immediately, however, people who reach the donut hole will receive a $250 rebate. In 2011, people who reach the gap will receive a 50% discount on brand-name drugs.
  2. The legislation also eliminates out-of pocket costs for a wide range of Medicare-covered preventive care services. Starting in 2011, it eliminates coinsurance payments and cost-sharing for preventive services, such as for prostate cancer screenings, mammograms, diabetes screening tests, and glaucoma screening tests.
  3. Federal subsidies to private Medicare Advantage plans, which currently cover about 25% of Medicare participants and cost the government more, on average, than traditional Medicare, will be begin to be cut in 2012. Over the next several years, the federal formula for reimbursing insurers will be reduced to bring them in line with traditional Medicare. As a result, some participating insurers may raise costs or cut extra non-Medicare covered services. (Note that all services covered by Original Medicare are required to be covered in every MA plan.)
  4. The new legislation also prohibits Medicare Advantage plans from charging seniors more for certain benefits, such as some chemotherapy, renal dialysis and skilled nursing services, than what beneficiaries would pay under the traditional fee-for-service Medicare program.

More information on additional changes will be provided in upcoming posts.

See UC Berkeley’s Center on Health, Economic and Family Security’s recent issue brief, “Advancing National Health Reform,” for more details on how the passed health reform affects California’s Medicare beneficiaries.