Affordable Care Act
July 26, 2018
Republican Study Committee Draft Budget Bad For Senior’s
As of June 15, 2018, the House Budget Committee has not produced a budget for FY 2019. However, the 150-member strong Republican Study Committee (RSC) did draft a budget, and many of their proposals or similar proposals have been included in previous House budgets. The RSC budget affects senior programs the following ways:
Medicaid, Health Care, and Medicaid Expansion:
It repeals the Affordable Care Act (ACA) in its entirety, including eliminating the Medicaid expansion. This would cause 23 million Americans to lose their insurance. •
Eliminates protections prohibiting discrimination against pre-existing conditions – The ACA prohibited insurers from discriminating against individuals with pre-existing conditions.
Eliminates protections against annual and lifetime caps – The ACA prohibited all insurers from placing annual or lifetime caps on their policies.
Eliminates coverage for preventive screenings – The ACA provided coverage for preventive screenings for those on the health insurance exchange, as well as those on Medicare. Individuals did not have to pay cost-sharing, including co-pays or deductibles.
Eliminates drug discounts and subsidies for Medicare beneficiaries who fall in the doughnut hole – The ACA provided drug discounts and subsidies for Medicare beneficiaries who fell in the doughnut hole.
Raises the Retirement Age – The bill raises the retirement age from 67 to 69 for anyone 49 years of age or younger. This amounts to a 14% benefit cut.
Reducing Cost-of-Living Adjustments (COLA) – The bill requires adoption of the chained-Consumer Price Index (CPI) to calculate the Social Security cost-of-living adjustment (COLA) resulting in a benefit cut, which would be compounded and would equal roughly 3% after 10 years and close to 9% after 30 years. The bill also eliminates COLAs for seniors with annual incomes above $85,000.
Special Minimum Benefits Offset by Lower COLAs – The bill provides a small bump for low-income beneficiaries, but because a lower cost-of-living adjustment and other provisions reduce benefits, many low-income beneficiaries would be worse off.
Doesn’t Require Wealthy to Pay Their Fair Share – Currently, workers pay FICA (federal payroll tax) contributions on up to $128,400 of annual income. Any income above that amount is not taxed for Social Security purposes. Instead of lifting the payroll cap so higher income individuals pay their fair share, this bill cuts benefits to improve trust fund solvency.
Premium Support – The budget calls for an end to Medicare’s guaranteed benefits. Instead, beneficiaries would receive a fixed stipend, e.g. a coupon they could use to either purchase insurance in the private marketplace or for traditional Medicare. The coupon would not be sufficient to cover the premiums, deductibles and co-pays, and seniors and people with disabilities would have to spend more out-of-pocket each year.
Raising the Age of Eligibility – Raise the age of Medicare eligibility from 65 to 67 to align it with Social Security. According to Kaiser, this would increase out-of-pocket health care costs by $2,200 a year for nearly 5 million individuals ages 65 and 66.
Means-Testing – Medicare beneficiaries, excluding higher income (individuals with income over $85,000 and couples incomes above $170,000) pay 25% of the cost of Medicare Part B and D, while the federal government pays 75% of the cost. The RSC budget proposes increasing the share that middle and lower-income beneficiaries pay.
Redesigning Medicare by combining Medicare Part A and B – The RSC budget would combine Medicare Part A and B deductibles to a single annual inflation-adjusted deductible of $750 and a coinsurance rate of 20 percent for amounts above the deducible. Currently, the Medicare Part B deductible is $183 and co-pay is 20%, while the Part A deductible is $1,340 for the first 60 days and the co-pay is 10%. Similar proposals have been shown to increase costs for many seniors.
Reducing First Dollar Coverage Under Medigap – Reduces first dollar coverage under Medigap by prohibiting Medigap plans from covering the first $750 for Part A and Part B services. After the enrollees meet the $750 deductible, and until they reach the $7,500 catastrophic cap, this proposal would set a uniform coinsurance rate of 10 percent. This would increase costs for individuals who have Medigap plans.