Health Reform's Changes in Medicare

The newly enacted legislation contains a mix of provisions—some to expand benefits, and others designed to slow the program’s growth rate. 

Medicare is the largest health insurance program in the country, and since Congress passed the Patient Protection and Affordable Care Act to reform the nation’s health care delivery system, many Americans have wondered what effect the new law will have on the popular program that covers seniors and people with disabilities.

The new law lays out significant changes to Medicare, including new benefits for enrollees, new taxes to shore up Medicare’s financing, and cutbacks in the growth of payments to hospitals and other providers. Due to the size and scope of Medicare, these changes will have a significant impact on the rest of the health care delivery system, as providers respond to the financial incentives inherent in the way that Medicare pays them. The reform provisions related to Medicare that will take effect beginning in 2010 include:

  1. Expanded prescription drug coverage
  2. Improved subsidies for drug coverage for people with low incomes
  3. Expanded coverage of preventive services
  4. Primary care improvements
  5. Increased premiums for high-income beneficiaries
  6. Increased Medicare taxes for high-income households
  7. Reductions in payments and other requirements for Medicare Advantage plans
  8. Reduction in the growth of payments to Medicare providers
  9. Special provisions for rural hospitals
  10. Encouragement for innovation in Centers for Medicare and Medicaid Services (CMS) programs

This Health Policy Brief explores the regulations that will guide how these provisions will be implemented in the coming weeks and months, and was published online on May 20, 2010 in Health Affairs.