Changes Are Coming For Medicare Under Trump’s Budget

Before President Trump was elected, one of his campaign promises to Americans was that he would not touch Medicare or Social Security. He has now proposed a budget plan for Medicare, which he claims will make it easier for seniors to opt out of Medicare. Under his plan, Americans would also be able to put more money into HSA accounts. Democratic lawmakers are worried that, if the proposal does go through, the Medicare changes and it’s funding levels will be drastically reduced.

Opting Out Of Medicare

older caucasian hands typing on a laptop keyboard with a silver bracelet on one wrist.
Trump’s new Medicare budget would allow seniors to opt out of Medicare and add more money to their HSA account.

Under the current system, as long as you are signed up for Social Security, you will be automatically signed up for Medicare Part A when you turn 65. 

One of Trump’s proposals is to allow people to opt out of Medicare Part A (hospital insurance), without their decision interfering with their Social Security benefits.

HSA Changes

Health Savings Accounts (HSAs) are offered to people with high deductible health insurance plans. These accounts come with tax benefits. You can make tax-free contributions, as well as  make tax-free qualified withdrawals from the account. Medicare beneficiaries cannot contribute to these accounts, even if they are just on Part A or have a high deductible plan. 

However, Trump wants to give Medicare beneficiaries with high deductible health plans the ability to make tax-deductible contributions to HSAs or medical savings accounts (MSAs). 

Other Medicare Changes

Further proposals by Trump would not structurally change the Medicare program, reduce the benefits, or limit eligibility for Medicare. Other changes in the proposal are similar to President Obama’s past budgets. They include:

  • Doctors would be paid the same price for services, regardless if they work for a hospital or private practice
  • Reduce payments in long-term care hospitals for patients discharged from a regular hospital. 
  • Reduce prices for prescription drugs.

    coinds stacked up with a clock in the background blurred.
    Republicans believe that allowing older adults to opt out of Medicare would help to fund the program.

Republicans believe that some reduction in the growth of the program and/or an increase in funding is necessary, and they believe that allowing older adults to opt out of Medicare would help to fund the program. The trust fund Medicare Part A hospital insurance is projected to be insolvent in 2026, meaning the trust fund would be empty and payroll taxes wouldn’t be enough to cover all of the necessary spending. 

“A big boost in the economy could potentially extend the life of the trust fund a bit,” says  Tricia Neuman, senior vice president and director of the Program on Medicare Policy at the nonpartisan Kaiser Family Foundation. “But even with a tailwind, policymakers will need to reduce Medicare spending, increase revenues or both to keep the trust fund solvent for an extended period of time. That said, there are a number of policies that could be considered to extend the life of the trust fund beyond those proposed in the Administration’s budget.”

Medicare beneficiaries could also benefit from some proposals. KFF’s Neuman says it is “conceivable” that provider payment changes to hospitals would reduce Medicare spending growth “which could potentially slow the growth in Medicare deductibles.”

Democrats argue that the Trump administration’s budget proposals would cut Medicare beneficiaries’ access to care. They also argue that the proposed HSA changes would only benefit  higher income Medicare beneficiaries.

Trump’s New Plan To Strengthen Medicare

With all of the recent talk and debates about “Medicare For All”, President Trump has decided to take action. In October, Trump signed an executive order while visiting Florida, pertaining to the Medicare health program. His goal is to improve Medicare by giving seniors the ability to choose from more affordable plans.

Protecting and Improving Medicare for our Nation’s Seniors

Because Democrats are pushing to expand Medicare to everyone, Trump proposed this plan in response. He stated that he will do whatever it takes to prevent the “socialist” proposal of Medicare For All. Trump’s order is aimed to reduce regulations, curb fraud, and provide quicker access to therapies and medical devices.

trump and new medicare plan book on shelf
Every president we have tries to improve our healthcare system. Let’s see how these changes work in the long run.

The order wants Medicare to offer and use more medical telehealth services, in order to reduce costs to seniors. The more that seniors have access to their doctors through telehealth, then the fewer emergency room visits would occur. And in order to accomplish this, Trump proposes to get rid of regulatory requirements that prevent medical professionals from practicing at the top of their licenses. 

This means that the focus will move from doing clerical tasks that don’t require a physician’s level of training to the patient’s care. For example, instead of filling out forms, faxing paperwork, and requesting medical records, the tasks can be alleviated by an assistant, freeing up the medical staff’s time to give more attention to the sick.

Allowing nurse practitioners and medical assistants to practice at the top of their license would “really enhance access to care, enhance provider availability for all Medicare beneficiaries, including in fee-for-service, and really help, especially with the rural healthcare crisis,”  HHS Secretary Alex Azar said in the media call.

More Money Back To Seniors

The order directs Medicare to create a new payment model that adjusts Medicare Advantage supplemental benefits. The purpose is to allow seniors to directly be a part of any cost savings that Advantage plans generate. This will include any monetary rebates, and lowered prescription drug prices.

Azar stated, “The executive order commissions us to examine all practices, regulations, and guidance to just make sure that we are not steering people into fee-for-service as opposed to giving them a genuine choice of Medicare Advantage or fee-for-service.”

“We’re lowering the cost of prescription drugs, taking on the pharmaceutical companies. And you think that’s easy? It’s not easy… I wouldn’t be surprised if the hoax didn’t come from some of the people that we’re taking on,” Trump said. He was referring to drug companies that were backing the impeachment efforts in Washington. He believes they were doing this as a way to sabotage his efforts of making prescriptions more affordable to medicare recipients.

seniors with medicare holding their grandchildren
As we age, we need healthcare. So, any insurance system that focuses on helping us as we mature should be improved.

What Trump Is Pushing For

The order is undoubtedly a way to pushback against Bernie Sanders’ Medicare For All proposal, which would open the Medicare gates to everyone in America. Trump sees it as socialism, with the administrator of the U.S. Centers for Medicare and Medicaid Services, Seema Verma backing it up, calling it a “pipe dream” that would just lead to higher taxes.  

Trump hopes that his proposal will be more beneficial to seniors, making Medicare a little more affordable, while at the same time condemning Medicare for All proposals. 

Trump Promises To Protect Pre-Existing Conditions

Over the years, President Trump has been slowly picking away at Obamacare, also known as the Affordable Care Act. But there has been one section of the ACA that he intends to keep, which is the pre-existing conditions clause. Trump recently stated he was going to “totally protect people with pre-existing conditions.” Despite the Trump Administration putting the provision in jeopardy, Trump is stating he backs it and that Democrats do not.

Trump promises to protect and cover pre-existing conditions, even after the ACA is gone.
Trump promises to protect and cover pre-existing conditions, even after the ACA is gone.

The controversy all began when Trump was running for presidency. One of his promises was to get rid of Obamacare, and so far he has kept that promise. Over the years, he has gotten rid of the individual mandate. This mandate stated that people must get health insurance or they will face a penalty. Due to getting rid of this mandate, many states have challenged the ACA’s constitutionality in a lawsuit this past February. These states are saying that since the mandate is unconstitutional, then the entire health care is also.

The Promise

Throughout the dismantling of the ACA, Trump is fighting to protect people with pre-existing conditions. He wants to make sure that they are still able to get health insurance, and will not be rejected or pay more because of the conditions. This is all came about as midterm elections were approaching, and he was urging people to vote Republican. In his tweet he stated that Republicans will back those with pre-existing conditions, and that Democrats will not, so “vote Republican.”

Trump administration officials said they will allow states to use federal subsidies to pay for health plans that don’t cover pre-existing conditions. Republicans all over the U.S. back what Trump has said about pre-existing conditions.

Make sure you plan ahead so that you are covered.
Make sure you plan ahead so that you are covered. Look into a short-term plan, and if it will work for you.

However, there are many doubts if this will actually hold true. A lot of people are skeptical about the pre-existing provision, especially after the midterm elections. Many see this as an attempt to get people to support Trump. The fact is that premiums may be high for those with pre-existing conditions, and not necessarily protect them.

Short-term plans are being expanded in hopes that people will go for them, which does not offer comprehensive plans. This means they may not necessarily cover pre-existing conditions. But if Trump does truly stand behind protecting pre-existing conditions, he can take some steps to ensure it will be be protected, which we have yet to see.

Once the lawsuit between the states and the government to get rid of the ACA is over, only then will we know what will happen with pre-existing conditions. This can cost a lot of people looking for health insurance a lot of money, and even possibly be denied coverage.

Trump Takes Action on Lowering Medicare Drug Prices

Medicare drug prices continue to increase making it harder for seniors to afford, President Trump decided to take action. Trump proposed a plan to bring down the prices of Medicare drugs by giving back to customers and focusing on raising foreign drug prices.

The federal government is not allowed to negotiate Medicare drug prices, so Trump said his plan will work without needing Congress’ approval. Insurers get discounts for the expensive name brand drugs, which are negotiated by pharmacy managers. Trump wants these rebates and discount distributed to the customers, which would help lower the prices. President Trump’s plan is to give at least one-third of the rebates to beneficiaries.

Seema Verma, the administrator of the Centers for Medicare & Medicaid Services, stated that the rebates are a “convoluted system,” because they allow manufacturers to raise list prices. This, in turn, increases the amount of money that insurers and pharmacy benefit managers collect in rebates, giving them no incentive to keep prices down.

“When prices go up, patient cost-sharing also goes up,” she said in a speech before the American Hospital Association earlier this week. “We’ve all noticed the increase in the amount we have to pay at the pharmacy counter. For seniors who are sometimes on fixed incomes, the pain is real. This is not acceptable.”

The Trump administration wants to raise the prices of foreign drugs in order to reduce the drug prices at home. The reasoning for this is because foreign places keep their prices low while Americans continue to pay highly for their drugs. The foreign countries benefit from America paying high prices for these drugs and essentially their development. “The United States both conducts and finances much of the biopharmaceutical innovation that the world depends on, allowing foreign governments to enjoy bargain prices for such innovations,” the council’s report said. “Simply put, other nations are free-riding, or taking unfair advantage of the United States’ progress in this area.”

The Food & Drug Administration is focusing on trying to introduce more generic drugs that are identical to name brand drugs. This way customers can opt to buy the generic brand and save some money. The agency is hoping that by producing more generic drugs will increase competition and eventually bring down the pricing of brand-name drugs.

Seniors have been struggling to obtain the medications they need due to how expensive they are. Some have to make drastic changes in order to get these medications because they can die without them. There are still talks amongst the Trump administration about reducing Medicare drug prices and they are hoping to make some positive changes in 2019.

Republican Tax Bill Cuts 25 Billion From Medicare

The GOP tax bill that the Republicans have been working on, can lead to major cuts in Medicare funding and spending in 2018. The bill is estimated to cut $25 billion from Medicare starting 2018, and resulting in $400 billion over the next ten years.

The Congressional Office has estimated a $1.5 trillion deficit to over the next 10 years due to the tax bill.

In 2010, Washington passed a “pay as you go” rule which requires any new laws to be deficit neutral. Basically if there is not enough economic growth to balance the money lost, then the Office of Management and Budget has to cut spending. Unfortunately, it is likely that one of the spending cuts will be to Medicare.

The tax bill is expected to pass, and while it does not exactly say that it will cut spending on Medicare, it will be an unintended result. Some Republicans stated that the cuts would affect doctors, health providers, and hospitals, not Medicare beneficiaries. They have also had talks to try and change the Medicare eligibility age from 65 to 67.

House Speaker Paul Ryan seems to threaten cuts to Medicare saying “we’re going to have to get back next year at entitlement reform, which is how you tackle the debt and the deficit. I think the President is understanding choice and competition works everywhere, especially in Medicare.”

A major issue with the possible cuts is that Medicare beneficiaries could end up being kicked off of their current Medicare plan, or receive fewer benefits.

Juliette Cubanski, associate director of the Program on Medicare Policy at the Kaiser Family Foundation says,“these cuts could be one bad side effect of this tax legislation. Many providers may be able to absorb the payment reductions if they have a very diverse patient base. But others who rely primarily on Medicare may find this cut really difficult to deal with.”

Roughly 54 million Americans currently receive Medicare benefits. Many fear the cuts will leave many Americans without coverage or unattainable expense to have coverage. However, McCarthy claims lawmakers will find a way to avoid the Medicare tax cuts. The tax bill is expected to be voted on in early January, when we will begin to see the effects of the bill.

Insurance Companies Are Suing Trump!

When the Trump Administration announced a rule to stop cost-sharing subsidies to insurance companies, there were threats of lawsuits. The threats have now become a reality, with an insurance co-op recently filing a lawsuit against the federal government.

Cost-sharing reduction payments were set up under Obamacare to ensure that customers would be able to receive low deductibles and out of pocket costs. In return, the federal government would pay back the insurers. The Congressional Budget Office estimated that the government pays about $7 billion a year to all ACA insurers for cost-sharing reduction payments.

The federal government is now being sued by Maine Community Health Options, requesting the money owed to them by law. They are seeking $5.7 million in cost-sharing reduction payments. The insurance company did not raise premiums despite the end of the subsidy payments.

The co-op claims that they cannot change its health plan part way through the year to make up for the lack of reimbursements, and they took a financial hit.

Attorney Stephen McBrady of Washington, D.C. submitted the lawsuit that stated, ” “Section 1402 requires health plans to provide cost-sharing reductions to members, and then the health plans to be reimbursed by the U.S. government under the ACA. Insurers, in turn, are guaranteed by the ACA to be reimbursed by the government for the cost-sharing reductions they pay to their insureds. The law is clear, and the government must abide by its statutory obligations. Plaintiff respectfully asks the court to compel the government to do so.”

Since the ruling to halt the payments in October of 2017, 19 attorney generals filed a challenge against the president, but a federal judge denied the request. Many co-ops have closed because of financial losses due to the lack of reimbursements.

Community Health Options is the largest individual insurance provider in Maine. If they succeed in their lawsuit, they will receive the money from the U.S. Department of Treasury’s judgment fund.

Another lawsuit filed against the U.S. is by Common Ground Healthcare Cooperative of Wisconsin. If these co-ops win, it will no doubt open the door for other insurers to receive the reimbursements owed to them by the government.

The Maine co-op, Community Health Options, have yet to receive a hearing date; it will be a lengthy battle.