Health care reform bill 101: What does it mean for seniors?

Many senior citizens worry about the effect that the health care reform bill may have on them. After all, they generally use the health care system more than do younger people. And those living on fixed incomes may have little leeway in their budgets to help if their health costs rise.

Would the healthcare reform legislation that President Obama plans to sign into law on Tuesday affect seniors in any direct way?

The short answer is “yes.”

Healthcare 101: What the bill means to you

The longer answer is that some seniors may lose Medicare benefits they now enjoy. Many others will gain from an enhancement of Medicare’s prescription-drug program.

Here are some specifics on these changes:

Medicare cuts

Under the healthcare reform bill, government payments to Medicare Advantage – plans that are run by private insurers such as Humana and are an alternative to traditional Medicare – will be cut by $132 billion over 10 years. (Those plans currently get somewhat more per person from the government than traditional Medicare does.)

Medicare Advantage plans often offer extra benefits that seniors in traditional Medicare don’t get. It is possible that these extras will be dropped as Medicare Advantage plans feel a budget squeeze.

In most areas of the United States, this reduction will be phased in over three years, beginning in 2011, although in some places it will take longer.

The bill does not contain cuts to traditional Medicare benefits. However, Medicare payments for home healthcare would be reduced by $40 billion between now and 2019. And certain payments to hospitals would be cut by $22 billion over that same period.

Medicare enhancements

The bill would bolster the existing Medicare prescription-drug benefit by addressing part of its “doughnut hole” problem.

Right now, after a senior has spent $2,700 on drugs in a year, coverage stops until that same person has spent $6,154 on drugs, when it starts up again.

Hence the “doughnut hole” nickname.

Beginning in 2010, people who fall into this hole will get $250 from the government to help. Thereafter, according to the bill, the US will gradually increase the percentage of drug costs it pays within this gap. By 2020, the US will pay 75 percent of senior drug costs between $2,700 and $6,154.

Medicare will also begin to pick up the tab for annual wellness visits.

Medicare payment advisory board

Healthcare reform legislation also establishes what it terms an Independent Payment Advisory Board, made up of 15 members, that would submit legislative proposals to reduce per capita Medicare spending if that spending grows too fast.

“Too fast” is defined as exceeding the growth rate of Consumer Price Index measures for a five-year period that ends in 2013.

If that happens, beginning in 2014, this board will submit proposals to Congress and the president for consideration.

Some critics have charged that this board will be the leading edge of Medicare reductions. Legislative wording in the healthcare reform bill prohibits the board from submitting any idea that would ration care, raise taxes, or change benefits.

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Health Care Reform Bill 101:

Introduction: What the bill means to you

Part 1: Who must buy insurance?

Part 2: Who gets subsidized insurance?

Part 3: What's a health 'exchange'?

Part 4: How long will reform take?

Part 5: Who will pay for reform?

Part 6: What will it mean for business?

Part 7: What does it mean for kids and families?

Part 8: What does it mean for seniors?

Part 9: Rules for preexisting conditions

Part 10: Will it make health care more effective?