Friday, November 5, 2010

Feds Battle For Hearts And Minds

Feds Battle For Hearts And Minds

The federal government continues the battle for the hearts and minds of health care consumers in a new report stressing Medicare savings due to the Patient Protection and Affordable Care Act.

Average Medicare beneficiary savings in traditional (fee for service) Medicare will be approximately $3,500 over the next ten years because of changes made by the Patient Protection and Affordable Care Act (ACA), according to a report released on Nov. 4 by the Department of Health and Human Services. Beneficiaries who have high prescription drug spending will save much more – as much as $12,300 over the next 10 years. In comparison, Medicare beneficiaries with low drug costs will save an average of $2,400 over 10 years.

(HHS previously released a statement by Don Berwick, administrator of the Centers for Medicare and Medicaid Services, that beneficiaries in the Medicare Advantage program would have an average reduction in cost of 1% for 2011.)

The analysis on traditional Medicare, released by the HHS Office of the Assistant Secretary for Planning and Evaluation (ASPE), shows that the ACA helps lower costs for those on Medicare by slowing the growth of cost-sharing in Medicare. Closing the Part D coverage gap known as the “donut hole” will produce the greatest cost savings. Already, more than 1.8 million seniors and people with disabilities who have reached the donut hole in 2010 received a one-time $250 rebate check, and checks will continue to be distributed to those who enter the donut hole this year, according to the report. Next year, people in the donut hole will receive 50% discounts on covered brand name Part D prescription drugs. Also starting next year, seniors and people with disabilities on Medicare will have access to a number of recommended preventive services and annual wellness visits at no additional cost. 

Although all seniors and people with disabilities in Medicare are likely to see savings, the savings will be greatest for those with costly medical conditions or high prescription drug costs, according to the report. Total savings per beneficiary enrolled in traditional Medicare are estimated to be $86 in 2011, rising to $649 in 2020. For a beneficiary with spending in the donut hole, estimated savings increase from $553 in 2011 to $2,217 in 2020.

According to HHS Secretary Kathleen Sebelius, “The Affordable Care Act makes Medicare stronger and reduces the burden of health care costs on some of our most vulnerable citizens. The law improves benefits for seniors and people with beneficiaries who rely on Medicare and ensures that Medicare will be there for current and future generations by extending the life of the Medicare Trust Fund. These benefits and savings are only possible with the continued implementation of the Affordable Care Act.”

The entire HHS report is available here.

For a comprehensive analysis of the Patient Protection and Affordable Care Act, including the full text of the law and additional information on health reform and other recent developments in employee benefits, just click here.

The estimate saving for years 2010 through 2020 are as follows according to the HHS report:


Table 1. Estimated Affordable Care Act Annual Savings
per FFS Medicare Beneficiary

Beneficiaries Not Reaching the Donut Hole
Beneficiaries Reaching the Donut Hole
All Fee For Service Beneficiaries


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