What Are the Implications of Repealing the Affordable Care Act for Medicare Spending and Beneficiaries?
Issue Brief
Congressional Budget Office, “Budgetary and Economic Effects of Repealing the Affordable Care Act,” June 2015, available at https://www.cbo.gov/publication/50252.
This discussion does not include the ACA provision to eliminate the tax deductibility of the 28 percent federal subsidy, known as the retiree drug subsidy (RDS), for employers who provide creditable prescription drug coverage to Medicare beneficiaries. Repealing this provision would not have a direct effect on Medicare spending but, in allowing for the tax deductibility of RDS payments, would be accounted for as a federal tax expenditure.
This $350 billion estimate is calculated from CBO’s statement that roughly one-half of the net increase in direct spending ($715 billion, between 2016 and 2025) would stem from repealing provisions that changed payment rates in the fee-for service sector. Congressional Budget Office, “Budgetary and Economic Effects of Repealing the Affordable Care Act,” June 2015, available at https://www.cbo.gov/publication/50252.
Medicare Payment Advisory Commission (MedPAC) “Report to the Congress: Medicare Payment Policy,” March 2009, available at http://www.medpac.gov/docs/default-source/reports/mar09_ch03.pdf.
Medicare Payment Advisory Commission (MedPAC) “Report to the Congress: Medicare Payment Policy,” March 2016, available at http://www.medpac.gov/docs/default-source/reports/chapter-12-the-medicare-advantage-program-status-report-march-2016-report-.pdf.
This $350 billion estimate is calculated from CBO’s statement that roughly one-half of the net increase in direct spending ($715 billion, between 2016 and 2025) would stem from repealing provisions that changed the rules for setting payment rates for Medicare Advantage plans. Congressional Budget Office, “Budgetary and Economic Effects of Repealing the Affordable Care Act,” June 2015, available at https://www.cbo.gov/publication/50252.
Medicare Payment Advisory Commission (MedPAC) “Report to the Congress: Medicare Payment Policy,” March 2016, available at http://www.medpac.gov/docs/default-source/reports/chapter-13-status-report-on-part-d-march-2016-report-.pdf.
According to CMS estimates, more than 11 million Medicare Part D enrollees have received a total of $23.5 billion in savings and discounts in the coverage gap since the enactment of the ACA, with savings averaging $2,127 per enrollee over five years. See Centers for Medicare & Medicaid Services, “Medicare Advantage Premiums Remain Stable in 2017; Beneficiaries Have Saved over $23.5 Billion on Prescription Drugs,” September 22, 2016, available at https://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2016-Press-releases-items/2016-09-22.html.
Table III.C1, Statement of the Operations of the Part B Account in the SMI Trust Fund during Calendar Year 2015, 2016 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, June 2016, available at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/Downloads/TR2016.pdf.
The Part B income-related premium was established by the Medicare Modernization Act of 2003 and took effect in 2007. The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) made further changes to Medicare’s income-related premiums requiring beneficiaries with incomes above $133,500 ($267,000 for married couples) to pay a larger percentage of Part B and Part D program costs than they currently pay, beginning in 2018. MACRA also included a provision to index the thresholds to inflation based on their levels in 2019.
Table V.B2: Key Rates of Growth for IPAB Determination, 2016 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, June 2016, available at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/Downloads/TR2016.pdf.
Congressional Budget Office (CBO), “March 2016 Medicare Baseline,” March 24, 2016, available at https://www.cbo.gov/sites/default/files/51302-2016-03-Medicare.pdf.
See also, “A Better Way Frequently Asked Questions,” available at http://abetterway.speaker.gov/_assets/pdf/ABetterWay-HealthCare-FAQ.pdf.
Ashley Kirzinger, Elise Sugarman, and Mollyann Brodie, “Kaiser Health Tracking Poll: November 2016,” Kaiser Family Foundation, December 2016, available at https://www.kff.org/health-reform/poll-finding/kaiser-health-tracking-poll-november-2016/.