Why Is Obama Changing The Medicare System?

President Obama recently signed the Affordable Health Care Act which includes changes to the Medicare system. He believes that enactment of the new law will eliminate existing gaps in coverage, reduce the overall cost of Medicare and insure its long term survival.

Changing The Medicare System To Eliminate Gaps In Coverage

Obama clearly wants to eliminate unpopular gaps in existing coverage like the “donut hole” associated with the Medicare Part D prescription drug program. This gap in coverage occurs after a senior makes $2830 in prescription drug purchases in one year. At that point, their coverage ends and does not resume until their prescription drug purchases reach $4550. Under the Affordable Health Care Act, this gap is gradually eliminated by the year 2020 through a series of rebates and prescription drug discounts for seniors.

Changing The Medicare System To Eliminate Waste And Reduce Cost

In addition to eliminating obvious cases of waste, fraud and abuse, Obama has focused on elimination of popular but what he believes to be excessive Medicare Advantage subsidies which generate increased profits for private insurers but cost substantially more than traditional Medicare.

Changing The Medicare System To Insure Its Survival

Obama has expressed concern about the future of the Medicare system, and creation of an Independent Payment Advisory Board (IPAB) is no doubt an attempt to insure the program’s long term fiscal stability while preserving its basic benefits. Although still characterized as a “death panel” by some opponents, the board is actually a mechanism to identify and respond to excessive Medicare cost growth. The IPAB is appointed by the President, confirmed by Senate and submits proposals to Congress to reduce per capita Medicare expenditures if they are growing too fast. These proposals, by law, can not include recommendations that ration care, change benefits or raise taxes.

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