Devon Herrick

The Affordable Care Act (ACA) will have a negative impact on seniors' access to care. Much of the funding for the ACA is derived by cutting $716 billion from Medicare over the next decade. One major cut includes a 25 percent fee reduction to physicians who treat Medicare enrollees. ObamaCare is also slated to cut funding for Medicare Advantage (MA) plans, which covers nearly one in every three Medicare enrollees. Compared to traditional Medicare, MA plans provide approximately $825 annually in added benefits to its mostly moderate-income enrollees.

The Obama administration is now poised to take another swipe at seniors — this time cutting their choice of Medicare Part D drug plans. The Centers for Medicare and Medicaid Services (CMS) wants to do away with the most popular Medicare drug plans: ones that offer seniors lower premiums (and lower cost sharing) in return for patronizing a preferred pharmacy network. CMS also wants to limit the number of plans an insurer can sponsor in each service region to only two, which will reduce seniors' options for drug plans.

About 90 percent of seniors take a prescription drug in any given year. Compared to other therapies, drugs are a relative bargain. Drugs make up only about 10 percent of total medical expenditures. Nearly 39 million Medicare beneficiaries, including both seniors and the disabled, have drug coverage subsidized through the Medicare. Most of these are enrolled in coverage known as Medicare Part D.

The 6 million health insurance cancellations that occurred in the fall of 2013 will pale in comparison to the number of Medicare Part D drug plans cancelled next fall if these regulations are implemented. Nearly 14 million seniors will lose the Medicare Part D stand-alone plans they have currently if the use of preferred networks is banned.

The Medicare drug program has been quite popular. Participating seniors pay about one-fourth of the cost of their drug plan, while the government pays for about three-fourths of the cost. Overall, seniors are highly satisfied with their drug plans. Satisfaction rates average about 90 percent to 95 percent. As a result, the proportion of seniors who lacked drug coverage prior to the Medicare Modernization Act of 2003 (MMA) has fallen by 60 percent.


Devon Herrick

Devon Herrick is a health economist and a senior fellow at the National Center for Policy Analysis (NPCA).