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AARP Bulletin

Is Your Medicare Safe?

The health law protects Medicare benefits, but it reduces future Medicare spending

My out-of-pocket costs on my Medicare Advantage plan are going up, and a lot of my copays are increasing. What's going on?

"Everybody is associating every change in the world with Obamacare," says Jonathan Gruber, a health economist at MIT. Insurers changed Medicare Advantage plans before the law, and they're still changing them, he says.

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"Overall, seniors are not paying that much more, and more people are still enrolling in Medicare Advantage plans," says Gruber, who advised the Obama administration on the ACA.

About three in 10 Medicare beneficiaries are enrolled in Medicare Advantage options, which are premium insurance plans that often include dental, vision and drug insurance. These plans have been subsidized by the federal government for years. The ACA is simply aiming to equalize costs, according to its proponents.

An analysis by an industry trade group found that most people in Medicare Advantage plans will see a 5 percent increase in premiums in 2014. Beneficiaries may have fewer options and higher out-of-pocket costs. Stephen Hemsley, CEO of UnitedHealth Group, the nation's largest provider of Medicare Advantage plans, says that the company will have to trim benefits. "Medicare Advantage has a couple of difficult years ahead," he says. (UnitedHealthcare offers AARP-branded Medicare Advantage policies.)

"This is no free lunch," Gruber says. But he and other supporters of the ACA say the changes are essential to help ensure that the program is around for future generations.

My doctor got a letter saying the insurance company is dropping her from its Medicare Advantage plan because of the health care law. Why?

The Medicare Advantage plans are run as businesses, and because the government seeks to reduce the rate of growth of reimbursements to those plans, companies are making decisions to offset those cuts. There are only a few ways Medicare Advantage plans can cope with reductions in payments, says Wilensky, the former Medicare chief.

"They can reduce some of the optional benefits, such as vision or dental coverage. They can raise premiums. And they can also tighten their physician networks," she says.

UnitedHealthcare has said it is terminating 10 to 15 percent of its Medicare Advantage physicians. The American Medical Association says that in at least 11 states, Medicare Advantage plans have cut thousands of physicians.

Critics worry that more doctors may stop taking Medicare patients or that patients will face lengthy waits for appointments or other changes. "The question is whether reductions in payments to health care providers will impair either access to health care services or the quality of those services," William Galston and Korin Davis of the Brookings Institution wrote in a 2012 analysis of the cuts. "It's too early to know for sure."

How does the law help older people with prescription drug costs?

People who reach the doughnut hole — the Part D coverage gap — get a 52.5 percent discount on brand-name drugs and 28 percent discount on generics. More than 7.1 million older and disabled people in the doughnut hole have saved $8.3 billion between 2010 and October 2013.

Next page: Will patient care suffer as a result of ACA payment cuts to hospitals? »

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