How Repealing the ACA Would Affect Medicare

If the ACA were repealed, the law’s savings and revenue provisions would be reversed, as would benefit improvements for Medicare, according to a study by the Kaiser Family Foundation. Repeal would increase Part A and B spending by restoring payment rates to private insurers (Medicare Advantage plans) and health care providers to their pre-ACA levels, among other changes.

Repeal would offset savings by eliminating coverage in the Part D doughnut hole and reinstating cost-sharing for preventive services. Because the ACA is expected to reduce net spending over 10 years, repealing the ACA would increase net Medicare spending by $716 billion over 10 years compared to the current baseline. Repealing the ACA would also accelerate the projected year of insolvency for the Part A Hospital Insurance Trust Fund by eight years, from 2024 (current projection) to 2016 (if the ACA is repealed). This is because spending for services under Part A would increase while revenues dedicated to Part A would decrease. As a result, within four years, Medicare would not be able to fulfill its obligation to pay for all Part A covered services.

Some provisions of the ACA reduce the growth in Medicare spending by phasing down payments to Medicare Advantage plans, reducing updates in payment levels to hospitals and other providers, and increasing premiums to be paid by higher-income beneficiaries.

The ACA also contains provisions that improve benefits, providing free coverage for some preventive benefits and closing the coverage gap in the Part D prescription drug doughnut hole by 2020. The law also includes higher payments for primary care physicians.

Some provisions are designed to reduce costs and improve the quality of patient care for elderly and disabled beneficiaries including incentives to reduce preventable hospital readmissions and establish accountable care organizations (ACOs).

The ACA establishes new sources of revenue dedicated to the Medicare program including an additional payroll tax on earnings of higher-income workers and a fee on the manufacturers and importers of branded drugs.

Originally, the Medicare provisions of the ACA were estimated to reduce net Medicare spending by $428 billion between 2010 and 2019. More recently, the Congressional Budget Office (CBO) estimated that the Medicare provisions would reduce Medicare spending by $716 billion from 2013 to 2022. The increase reflects a new 10-year budget window and changes in the CBO baseline. For more information, visitwww.KFF.org.

Last Updated 7/11/2017

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