Think Changes to Obamacare Won't Affect You? Think Again

You may think a repeal of Obamacare would apply only to the roughly 22 million Americans who have gained coverage under the law. But changes to the law formally known as the Affordable Care Act would also affect current and future Medicare beneficiaries—that is, pretty much all Americans.

After a rush to begin dismantling Obamacare when he first took office, President Donald Trump appears to have pushed the pause button. He said in an interview with Fox News over the weekend that it might take until next year for replacement legislation to be ready. Some lawmakers have recently shifted their rhetoric from repealing Obamacare to “repairing” it, suggesting less of an overhaul than previously envisioned.

In any event, it’s worth considering what is at stake for Medicare as the various proposals take shape. The Affordable Care Act contains about 165 provisions affecting Medicare, according to Medicare's trustees. These range from improving benefits for the 57 million current beneficiaries to shoring up the program’s long-term finances for future ones. What's more, Medicare remains vulnerable to future cuts that might help fund Obamacare replacements in the absence of the additional income taxes that Obamacare levied on higher earners.

Below are three areas to watch:

Obamacare Expanded Medicare Benefits

Since 2011, Medicare beneficiaries have received free preventive screenings such as mammograms and colonoscopies. The law also implemented an annual free wellness visit. These changes mirror those the law made to the insurance market for people under age 65: Both group and individual plans must now cover annual preventive checkups and other screenings at no cost to patients. (Read about how the Affordable Care Act affects employer-sponsored health coverage.)

Before Obamacare, most Medicare beneficiaries paid a co-payment for preventive services, and, depending on their coverage, possibly a percentage of the overall doctor’s bill. While this might not seem like a big outlay, half of all Medicare beneficiaries had incomes below $24,150 per person in 2014, according to the Kaiser Family Foundation, so every little savings helps.

The ACA also included provisions to close the “doughnut hole,” as the coverage gap in Medicare Part D drug plans is called. For 2017, the coverage gap begins once beneficiaries and their plan have together spent a combined $3,700 on covered drugs and ends when the beneficiary’s own spending reaches $4,950 and so-called catastrophic coverage kicks in.

Before the Affordable Care Act, beneficiaries had to pay the full amount, or 100%, of their drug costs in the doughnut hole. That amount has shrunk each year since the law took effect and today stands at 40% for brand-name drugs and 51% for generics. The donut hole is slated to close to by 2020, when beneficiaries will be responsible for 25% of their brand-name and generic drugs after they meet their deductible, regardless of how much out-of-pocket spending they incur throughout the year. More than three million beneficiaries hit the doughnut hole before the law took effect, and some were forced to skip doses, split their pills, or not fill their prescriptions at all due to high costs, according to the Medicare Rights Center.

These benefit improvements “have not been at the top of the list” of possible cuts when the Affordable Care Act is replaced, says Stacy Sanders, federal policy director at the Medicare Rights Center. But a repeal without replacement could nonetheless put them in jeopardy, she notes.

It Also Strengthened Medicare's Finances

Republicans eager to make structural changes to Medicare like to say the program is “broke.” Rep. Paul Ryan used the phrase last November, and Rep. Tom Price repeated the refrain last month in his confirmation hearing to become the head of the Department of Health and Human Services. While Medicare's spending rate is rising due to increasing health care costs and increasing numbers of beneficiaries, the program is not broke.

In fact, Medicare would be in worse shape if it weren’t for the Affordable Care Act. The law included many cost-cutting provisions, including a reduction of federal payments to Medicare Advantage plans, which are private insurance plans that you can buy instead of traditional Part A hospital coverage and Part B doctor coverage. Because of that and other changes, the Part A trust fund is projected to remain solvent for 11 years longer than before Obamacare was enacted, according to an analysis by Paul N. Van De Water for the Center on Budget and Policy Priorities.

Repealing the Affordable Care Act completely would add $802 billion to Medicare spending from 2016 to 2025, according to the Congressional Budget Office. In order to fund this increase, the program would likely raise premiums, deductibles, and cost sharing for beneficiaries, according to the Kaiser Family Foundation.

Could Medicare Cutbacks Be Ahead?

The Affordable Care Act extended government-subsidized health insurance to millions of people. To help fund this coverage expansion, the law raises taxes on the very wealthy. Provisions include a 3.8% surtax levied on certain net investment income, and an additional 0.9% tax on income above $200,000 for single tax filers and $250,000 for those married filing jointly.

Most of these tax increases will likely disappear from any replacement plan. In fact, Vox’s Matthew Yglesias has written that Republicans’ desire to eliminate these taxes is a big driver of their push to repeal Obamacare: "Subsidizing the health care costs of working-class people is expensive, and while Democrats want rich people to pay the freight for doing it, Republicans do not."

And yet, Republicans have also said that they don’t want to yank coverage from anyone. Replacement plans will aim to keep people covered, and maybe even expand the ranks of the insured. Republicans also don’t want prices to soar for consumers, since one of their main criticisms of the Affordable Care Act is that premiums and deductibles have been too high.

Essentially, Republicans want to retain key features of the Affordable Care Act in the absence of some of the law’s key funding mechanisms. In order to make up for the shortfall, they may cut funding to other health programs, including Medicare and Medicaid, Sanders says.