What Affect Will Obamacare Have On Medicare Supplement?


Gang of Six - Cartoon

Gang of Six – Cartoon (Photo credit: DonkeyHotey)

I know that what I am about to say is going to “set off” some of my readers on the “far right.”  During the past few years, much mis-information has been distributed about Obamacare.

In this post I will “vent” for a few moments and then answer the question, “What Affect Will Obamacare Have On Medicare Supplement?”

OBJECTIONS TO OBAMACARE

In my opinion, the PPACA was a mistake but not for the politically biased reasons that are often mentioned.  There are many good changes that modified the nation’s health insurance system.

My objections are much broader.  I have three major problems with the law.  My main objections are as follows.

  1. The PPACA became law through secrecy and tricks.  It was drafted in secret by the President of the Senate who forced a vote on a law that was over 900 pages in less than 48 hours.  Later it was passed through the House of Representatives only by using the “Reconciliation” process.  The entire process reminded me of a proverb I was taught as a kid while sorting laundry, “If its doubtful, its dirty.”
  2. The PPACA cedes too much power from an elected congress to an unelected member of the Executive Branch.  The phrase that appears most often in the legislation is, “The Secretary Shall…”  The result is that while congress authorized the skeleton of a law, they left it up to an unelected autocrat to flesh out.  America has been hit with hundreds of pages of “Rules” that have come from the Department of Health and Human Services that should have come from Congress.  In my opinion, the PPACA gives too much power to the President.
  3. The Individual Mandate bugs the snot out of me.  I realize that the Supreme Court has ruled that the Individual Mandate is constitutional.  Liberal politicians and press were eager to focus on parts of this ruling.  Unfortunately, they have not told the entire story.  The Individual Mandate is only constitutional when it is viewed as a tax levied by Congress.  I do not like the idea of a new tax but more importantly, I hate being told how I have to spend my money by the government and then that same government telling me, “It is not a tax!”  I do not know which bothers me more; a new tax or a lying government.

MEDICARE SUPPLEMENT INSURANCE

Now that that is off my chest, let me turn my attention to Medicare Supplement Insurance (Medigap) and how it is addressed by the PPACA.

A few months ago I wrote, “How Does Obamacare Affect Medicare Supplement Insurance?”  It turned out to be one of the most popular posts on this blog for 2011.  Apparently, many Americans are concerned about what will happen to their Medicare Supplement options in 2014.

I can’t really say that I blame them for their concerns.  I hope the information below helps calm some of their fears.

There are a couple of changes to Medicare that were made by the PPACA but most changes are going to affect Americans who are not enrolled in Medicare.

MEDICARE ADVANTAGE

The part of Medicare that was affected the most was Medicare Advantage.  That is the plan that allows private insurance companies to compete with the government to administer health insurance for people on Medicare.

Insurance companies are still free to design their policies as they wish, provided they provide coverage to their members with all the benefits that they would have with Original Medicare.

The biggest change that was made was in how Insurance companies would be paid to administer Advantage programs.

The PPACA did not eliminate the Advantage program.  It just made it less desirable for insurance companies to participate.  Already, several insurance companies have stopped offering Advantage plans.  Heaven only knows what the future has in store for Advantage.

The new regulations could make Advantage plans very desirable.  However, I am not convinced that there is a long-term future for Medicare Advantage.  When the PPACA was first passed I read that 40-60% of those who had Medicare Advantage would return to Original Medicare within 5 years.  Although the Medicare Advantage plans that I saw for 2013 are excellent plans, I see no reason to alter my long-term views.

MEDICARE D

The PPACA also made improvements to the Medicare D plan that pays for prescriptions.  It mandated that pharmaceutical manufacturers must absorb some of the cost for prescription drugs for those who meet the “Donut Hole” until the “Donut Hole” is phased out over the next 10 years.

To this day, I do not understand why congress did not just eliminate the “Donut Hole” immediately rather than a slow, 10 year phase out.

ANNUAL EXAMS

Previously, Medicare enrollees were only entitled to one physical exam that was paid for by Medicare.  That was called the, “Welcome To Medicare” exam and had to be done during your first year with Medicare B.

After all the debate about the benefit of “Preventive Medicine” during the Health Care Reform Debates, congress had to add a provision for an annual physical to Medicare. If they didn’t they would look like hypocrites when they added the Preventive Services benefit to private insurance but not to Medicare.

MEDIGAP

In the title of this post I promised to answer the question, “What Affect Will Obamacare Have On Medicare Supplement?”  The answer to that question is easy.  Obamacare has zero effect on Medicare Supplement insurance.

All the fear mongering and warnings that drastic changes to senior’s Medigap will be made as a result of the PPACA are false and just political spin.  The fact is that Medicare Supplements are not even mentioned in the PPACA.

Yes, there were changes to the Medigap plans that were allowed in June, 2010 but they had no relationship to the PPACA that became law three months earlier.  At that time Plan J was replaced with two new plans, M and N.

The changes had been worked on for months.  The timing of their rollout so soon after the PPACA was authorized was purely coincidental.

Original Medicare, Part B, no matter how wonderful it is, is not the same as most private health insurance plans.  People who are new to Medicare can often be surprised.  They are used to an insurance plan that has a Maximum Out-of-Pocket.  Once they have paid that amount, they do not have to pay anything else for the rest of the year, regardless of what their medical bills are.

Medicare B is different.  If your doctor agrees to accept Medicare as payment in full, Medicare will only pay 80% of the bill.  You are responsible for the additional 20%.  Previously, most people with insurance had a cap for catastrophic medical bills.  Medicare B has no cap.

If you want a ceiling on the amount you will have to pay, the only option you have is a Medicare Supplement insurance policy, also known as a Medigap.

It is true that major changes to Medicare Supplemental insurance are being considered by congress and the president as a way to hold costs down for Medicare.  There is a threat to the program as we know it today.  Although the Medigap program is not threatened with extinction, there is a movement in congress to modify it so that Medicare beneficiaries are not able to buy an insurance policy that will pay their deductibles for them.

Some members of congress think that if a senior citizen has “skin in the game” he will think twice before spending Medicare’s money to see a doctor.

The PPACA, a.k.a. Obamacare, does make changes to the Medicare program but has no effect on Medicare Supplement insurance.  If that happens, it will be the result of a different piece of legislation.

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