Obamacare also called on Medicare to pay for one wellness exam each year for beneficiaries. (The exam is not a full-fledged physical; it’s basically a visit to assess someone’s health risks. Patients fill out a short health risk assessment, and the doctor may measure blood pressure and body mass or discuss strategies for improvement). The exam is free for seniors if their doctors have agreed to accept Medicare’s payment in full (most do). Doctors may do other tests and provide other services like vaccinations. Some may be covered under Medicare’s preventive benefits, but others may not be. The wellness exam has been underused. In 2012 only about 12 percent—about 3.1 million seniors and disabled people—enrolled in traditional Medicare (not Medicare Advantage plans) got their wellness visit.
Obamacare intended these as a stopgap measure for sick people who needed insurance but have been shut out of the individual market because they had preexisting conditions, until the part of the law forbidding that takes effect. While several states had offered high-risk pools for years with little success, the health reform law pumped some $5 billion into such pools to encourage sick people to join. Advocates feared that wouldn’t be enough. Medicare’s chief actuary predicted in the spring of 2010 that 375,000 people would sign up by the end of that year. Instead enrollment has been disappointing. Sky-high premiums and deductibles have deterred a lot of would-be customers. Only 220,000 people are currently in them, and states are phasing them out in anticipation of the new exchanges.
Small business tax credit.
The idea here was to encourage small businesses to offer insurance to their workers by refunding a percentage of a firm’s health insurance expenses between 2010 and 2013. This has not been a spectacular success. The Government Accountability Office found that the credit was too small to persuade business owners to spend the time and money calculating the credit to cover their workers. It was estimated that between 1.4 and 4 million companies would be eligible for the credit. In mid 2012 the Government Accountability Office reported only 170,300 firms had claimed a credit in 2010. The White House said that in 2011, the number had jumped to about 360,00O, still way short of the estimates.
Medicare Advantage plans.
The president came to office vowing to cut the government’s overpayments to Medicare Advantage plans, which are a private insurance alternative to receiving Medicare benefits, and which have been getting more money from Medicare for services than traditional government-run Medicare pays for the same benefits. And indeed the Affordable Care Act called for some $200 billion in cuts to these plans. For years the Medicare Payment Advisory Commission reported that the government was overpaying sellers of Medicare Advantage plans, and that those overpayments were shortening the life of the Medicare Hospital Trust Fund. But administration actions over the past few years have raised questions about how serious the president is about cutting overpayments.
First came a Medicare decision that restored money to Medicare Advantage plans. The rationale was to encourage better care. Plans that earned at least three stars on a five-star scale for improving care received a bonus. Three star or average plans could get a bonus payment of three percent of what the government normally paid them to provide benefits to seniors. Then this year, as CJR noted, Medicare Advantage plans were scheduled for a reimbursement cut of 2.3 percent as part of an annual review process. But a lobbying campaign by the industry aimed at the public and Beltway pols instead resulted in a 3.3 percent increase—worth billions to insurers.
One provision of the ACA calls for insurance companies to pay out at least 80 percent of the premiums collected in benefits to policyholders. The idea here was to limit what they could spend on administrative costs and retain as profits. The administration says on August 1 that about 8.5 million people will get rebates averaging $100 because their insurance carriers did not spend enough
on medical care. This year’s rebates total about $500 million, compared with $1.1 billion last year, and the administration says the so-called 80/20 rule has forced companies to be more efficient and lower their premiums.
Why the mixed review? While an extra hundred bucks or so is certainly welcome news for those who get it, long-range questions remain. Insurance experts say it’s not hard for the big companies to meet the new 80/20 rule. For small companies, which the administration is counting on to offer competition and lower prices of insurance throughout the system the 80/20 rule may be difficult to comply with. Time will tell.