Health Reform and Medicare, Medicaid
Medicare and Medicaid under the New Health Reform Law
Since 1965, Medicare and Medicaid have served millions of Americans in offering affordable health care coverage from the federal government. With the creation of the Patient Protection and Affordable Care Act (PPACA) of 2010, these two social insurance programs are being modified and changed. Here is an overview of how these changes will impact you, the consumer.
A Quick Overview of Medicare and Medicaid
Medicare and Medicaid were signed into law in 1965 by President Lyndon B. Johnson as a way to ensure health care coverage for eligible, needy families and the elderly. Medicaid was designed to offer government subsidies for individuals and families who meet certain means-based eligibility requirements, such as children, pregnant women, individuals who are around or below the poverty line, and those with disabilities.
Medicare is a joint federal-state program targeted towards senior citizens above the age of 65 as away to reduce the high annual costs of health care, due to advanced treatment, prescription drugs, and nursing home coverage. Indeed, nursing home coverage is expected to be one of the main costs of the program over the next decade.
PPACA and Medicare
Health Reform, also known as the Patient Protection And Affordable Care Act (PPACA), is a sweeping piece of legislation that is designed to change many major aspects of how health car coverage is administered in the United States. Part of this involves making changes to Medicare and Medicaid.
One major change that was a hotly-contested component in PPACA is the expansion of coverage for millions of Americans under Medicaid. Those who have an income at or below 133% of the federal poverty level (FPL), estimated in 2010 to be $10,830 for individuals, who otherwise do not qualify for Medicaid, are now eligible to be covered under the program.
This change alone will add an estimated 20 million people to the Medicaid program. Given that half of Medicaid is funded by states, many state Governors had mixed emotions about covering more people while having to saddle their taxpayers with more tax obligations.
PPACA and Medicare
On the Medicare front, an important change comes with the Medicare Part D prescription drug benefit. Before PPACA, there was a coverage gap in the benefit, popularly known as a donut hole. Joining a prescription drug plan under Medicare meant that you had to pay up to the first $310 of the costs. You then pay 25% of your total drug costs, up to $2,830. After this point, you then have to pay 100% of your costs until they reach $4,550. This does not include the monthly premium.
With PPACA, you will receive a $250 rebate once you’re in the gap. In 2011, you will begin to receive a 50% discount on name-brand drugs. The truly good news for those in the program is this: By 2020, the gap will be completely closed, meaning you will pay 25% of your total drug costs instead of 100%.
PPACA has made major changes in the health care landscape in America. These changes in Medicare and Medicaid are just parts of the overall legislation – but to you, they may be some of the most important.