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Do Obamacare drug savings come at a cost for seniors?

By   /   June 26, 2012  /   No Comments

By M.D. Kittle |Wisconsin Reporter

MADISON – Maybe it’s smart politics.

But is it ultimately true?

With the U.S. Supreme Court’s monumental decision looming on the Patient Protection and Affordable Care Act – also derisively known as Obamacare to concerned conservatives across the country – the Obama administration has been burning up the PR machine telling what it sees as the success stories of the health care the president’s health care law.

The most recent news release lauds the Affordable Care Act, or ACA, for saving some 5.25 million seniors and individuals with disabilities $3.7 billion on prescription drugs.

A Wisconsin Reporter review of government data show Wisconsin seniors have realized more than $9 million in prescription savings, including more than $1.39 million in Milwaukee County, and more than $1 million in Dane County.

Beth Kaplan, spokeswoman for the state Department of Health Services, said in 2010 there were 74,400 Medicare beneficiaries who hit the so-called donut hole and received a one-time check of $250.

The Centers for Medicare & Medicaid Services released data showing that in the first five months of 2012, 745,000 people with Medicare saved a total of $485.3 million on prescription drugs in “donut hole” coverage gap – a reported savings of $651 each.

Medicare recipients — those 65 and older and those under 65 with certain disabilities — under Medicare Part D have long faced a gap, or a donut hole, amounting to hundreds of dollars in out-of-pocket expenses.

“Thanks to the health care law, millions of people with Medicare have been paying less for prescription drugs,” CMS Acting Administrator Marilyn Tavenner boasted in the news release.

“The law is helping people with Medicare lower their medical costs, and giving them more resources to stay healthy. By 2020, the donut hole will be fully closed thanks to the Affordable Care Act.”

But buyer beware, said Kathryn Nix, policy analyst with the Heritage Foundation, a Washington, D.C-based conservative public-policy research organization.

Nix said there’s no disputing Medicare recipients have saved money on prescription drugs since the implementation of the health care act. But at what cost to beneficiaries and taxpayers at large?

While closing the donut hole may be helping more than 5 million cover prescription drug costs, she asserts the 46 million people covered under Medicare could face some difficult funding questions.

“Closing the donut hole just shifts costs elsewhere,” Nix said. “It’s like squeezing a balloon.”

The Congressional Budget Office estimates the Affordable Care Act will cost taxpayers $1.083 trillion over the next decade.

To cover the growing number of uninsured and poor through the federally funded state-administered Medicaid program, about $500 billion would be shifted from Medicare, Nix said.

The law does drive down the rate of Medicare spending, with the brunt of the savings borne by health-care providers.

Medicare payroll taxes are slated to climb by some $113 billion over 10 years, which, at taxpayers’ expense, is expected to bolster Medicare’s finances. Over time about $358 billion is projected to be added to Medicare trust fund balances, according to the CBO.

Those savings, thanks to the federal government’s nifty unified budgeting system – taking money from other banks such as Medicare to pay for other programs – will cover the cost of adding some 30 million uninsured to the Medicaid system.

“There are going to be a number of consequences for seniors,” Nix said of the health care law, that is if the Supreme Court decides the Affordable Health Care act is constitutionally valid. That ruling is expected Thursday.

Nix said the biggest impact will be reduced access to providers, financially hit by a lower Medicare reimbursement rate.

“These cuts are unsustainable. They affect the providers’ ability to keep their doors open to Medicare patients,” Nix said.

At its current rate, Medicare’s Hospital Insurance Trust Fund is projected to be insolvent in less than a decade. Without a cash infusion to the plan, the annual sky-rocketing deficit will be further burdened – demanding more from future generations of taxpayers.

Helen Marks Dicks, associate state director for state advocacy at AARP Wisconsin, said the health care law has benefited Wisconsin seniors.

AARP supports the Affordable Health Care law.

Wisconsin has its own prescription-drug assistance program for seniors that AARP, Gov. Scott Walker’s administration and the state Department of Health Services are lobbying to extend.

SeniorCare requires an annual premium of $30 per year, with fixed copays on name-brand and generic drugs. The deductible depends on income level. About 60,000 individuals are enrolled.

“It’s unique, only in Wisconsin,” Dicks said. “It’s been a very successful program.”

The Walker administration is applying for a three-year extension of the federal waiver that created it, a waiver slated to expire at the end of the year. DHS holds hearings in Stevens Point and Waukesha this week to take comment on the program, funded through a combination of state, federal and health care provider sources.