Assignment 3: ACA and Medicare.docx - Running head ACA AND...

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Running head: ACA AND MEDICARE SPENDING1The Impacts of ACA on Medicare Spending Ay-Lih WeWest Coast UniversityFinancial Management for Health Care ProfessionalProfessor Goodner18 November 2018The Impacts of ACA on Medicare SpendingMedicare is the federal fund program, which provides health insurance for people over age 65 and people with permanent disabilities, that helps to pay for their inpatient and outpatient
ACA AND MEDICARE SPENDING 2visits, prescription drugs, and other acute services (Cubanski & Neuman, 2018; Nowicki, 2015). When President Obama signed the Affordable Care Act (ACA) in 2010, it is projected to reduce 5.8% of Medicare spending per year (Nowicki, 2015, p. 105). To deliver that reduction, the goals are to reduce the overpayments to providers, hospitals, and Medicare Advantage plans by implementing new programs and policies (Nowicki, 2015, p. 105). As a result, ACA increased the payroll taxes to 3.8% of contribution for high-income taxpayers to assist funding Medicare Part A, as well as an increased in Medicare Part B and Part D premiums for high-income beneficiaries (Nowicki, 2015, p. 105). According to Jacobson, Neuman, and Huang (2013), with the overpayment reduction in Medicare Advantage plans, the Congressional Budget Office (CBO) and the Centers for Medicare and Medicaid Servies (CMS) projected a sharp reduction, as many as 7 million fewer Medicare Advantage enrollees, in 2019. However, there was a 30% inclined in Medicare Advantage enrollment from 11.1 million in 2010 to 14.4 million in 2013 (Jacobson et al., 2013). The CBO could not explain explicitly why the enrollment has continued to increase since 2010, but they expected it would continue to grow slowly through 2022 (Jacobson et al., 2013). Some financial analysts believed that the plans were able to keep the premiums low because they were benefitting from the slowdown in medical spending; while others speculated the influx of baby boomers who have better-managed care plans was the explanation to the growth in enrollment (Jacobson et al., 2013). The ACA will reduce Medicare overpayments to hospitals, physicians, and insurance companies (Nowicki, 2015). The questions are, did the Medicare overpay them and what’s the impact on the hospitals with the reduction? According to Perez (2013), the reduction will lower hospital margins because “they amount to a 9 percent across-the-board reduction to Medicare
ACA AND MEDICARE SPENDING 3payment, or a decrease of approximately $6.5 million per hospital per year, over the next 10 years” (p. 41). As a result, up to 20% of hospitals could become unprofitable (Perez, 2013, p. 41). Additionally, Medicare spending growth limits by the Independent Payment Advisory Board (IPAB) could have an impact on the providers and Medicare patients (Perez, 2013, p. 42). The hospitals are asked to improve the quality of patient care, maintain access, and reduce costs with less funding (Nowicki, 2015; Perez, 2013). Providers will limit the volume of Medicare patients by opting to discontinue accepting or stop accepting new Medicare patients to cope with the reduction (Perez, 2013, p. 42). As well as some hospitals may choose to lay off employees toprepare for its current or downward payments. UCSF Medical Center and Benioff Children’s Hospital, for example, had laid off 300 full-time employees in October 2012 to reduce its cost of care (Perez, 2013, p. 43).

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