Patient Protection and Affordable Care Act (PPACA): Effect on the Fastest Growing Population, the Elderly

Joni Maga, MD University of Miami/Miller SOM, Miami, Florida

Michael Lewis, MD University of Florida COM-Jacksonville, Jacksonville, Florida

President Barack Obama signed the Patient Protection and Affordable Care Act (PPACA), generally called the Affordable Care Act (ACA), into law on March 23, 2010. It is probably the most important piece of healthrelated legislation since the enactment of Medicare and Medicaid in 1965. In this chapter, we explore the ACA and its potential impact on the elderly surgical population. This review is important since, in 2013, 3 years after the advent of ACA, >1 in every 8 Americans is 65 years of age or older.1 In the United States, this age group represents 13.3% of the population, representing 41.4 million Americans. These are staggering data, especially when compared with historic numbers of 4.1% in 1900 when the same group numbered 3.1 million. More importantly, it is predicted that the growth of the elderly population will continue to skyrocket. Since 2000, there was an 18% increase in this cohort, which was nearly double the growth of the population under 65 years of age (9.4%). By 2040, this population will nearly double again (Fig. 1). Remarkably, the oldest of the aged is where the greatest change is seen. When compared with the population of 1900, the 65 to 74 age range is 10 times as large, the 75 to 84 age range is 16 times as large, and the above 85 age range 40 times as large. Providing affordable quality health care to this expanding population is salient and challenging not only because of their sheer numbers, but also because this is the subset of the population that requires the most care, and therefore uses the most health-care dollars.

REPRINTS: MICHAEL LEWIS, MD, UNIVERSITY OF FLORIDA COM-JACKSONVILLE, 655 WEST EIGHTH STREET, JACKSONVILLE, FL 32209. E-MAIL: [email protected] INTERNATIONAL ANESTHESIOLOGY CLINICS Volume 52, Number 4, 58–63 r 2014, Lippincott Williams & Wilkins

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Figure 1. A profile of older Americans: 2012.1 Number of Persons 65+, 1900-2060 (numbers in millions).

The majority of elderly Americans (93%) get their health care through Medicare as it is open to all American citizens over the age of 65 (Fig. 2). It has been estimated that in 2010 the federal government spent 528 billion dollars to fund Medicare. Because of the expanding population, it has been projected to rise above 1 trillion by 2020.2 Therefore, it is clear that any health care reform will involve Medicare reform, which in turn will affect the vast majority of the elderly population. The PPACA’s main objective is to provide higher quality affordable health care to all Americans while reducing the number of the uninsured. The following is a brief review of its main provisions,2 necessary to fully grasp its impact on the elderly. (1) The Individual Mandate: Every person (with few exceptions) will be required to carry health insurance either through private insurance, his or her employer, Medicare, Medicaid, or through the newly formed Health Care Exchange. Subsidies are made for those individuals with financial hardship. Failure for an individual to comply will result in a financial penalty seized through the IRS. Tax credits will be provided to small businesses to provide basic employer-based coverage, and financial penalties will be assessed for large businesses that fail to offer minimum coverage. On the flipside, no person can be denied coverage based on any preexisting conditions. (2) Expansion of Medicaid: In states that agree to participate, Medicaid eligibility income requirement will be raised to 133% of the poverty line. This could affect up to 15 million uninsured by 2019, assuming that all 50 states participate. (3) Health Care Exchange: This is an online health insurance plan marketplace, https://www.healthcare.gov, where government-approved health care plans can be compared by the consumer and enrollment can take place. Those uninsured individuals who are not eligible for Medicare, Medicaid, or employer-based programs can purchase his or her insurance through their state’s Health Care www.anesthesiaclinics.com

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Figure 2. A profile of older Americans: 2012.1 Percentage of Persons 65+ with Health Insurance Coverage, 2011. Note: Data are for the non-institutionalized elderly. A person can be represented in more than one category.

Exchange. There will be subsidies provided to those individuals between 133% and 400% of the poverty line including childless adults, a group that was historically excluded from Medicaid prePPACA. Those Americans >400% of the poverty line still have the opportunity to purchase plans but without government subsidy. The plans available have met minimum government standards and are priced competitively against each other to, at least in theory, be more affordable than private insurance. Finally, no longer will Americans be denied or be forced to pay higher premiums based on preexisting conditions. Prices for policies will be standardized and differ based only on geography, age, and tobacco use. This has been estimated to offer coverage to approximately 23 million previously uninsured Americans by completion of the rollout some time in 2019. (4) Medicare Reform: Through a series of provisions aimed at improving efficiency, quality, delivery, and cost, it is estimated that Medicare spending will decrease substantially, estimated at $575 billion over the next 10 years.3 It is through these cost savings that the majority of the provisions of the ACA, namely, the expansion of Medicaid and the subsidies provided for the Health Care Exchanges, will be provided.3 In addition, Medicare Part D will have increased funding to offer improved prescription drug coverage.



How the Elderly Win With the ACA

According to CMS, without Medicare reform, the Hospital Insurance Trust Fund, which pays for Medicare Part A benefits such as www.anesthesiaclinics.com

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inpatient hospital, skilled nursing facility, home health, and hospice care, would have been insolvent by year 2017.4 The latest report projects the current depletion date to be some time in 2026.5 The ACA’s reform of Medicare represents a win for the elderly population. One way the ACA decreases Medicare spending is by supporting a quality-centric payment structure over the historical volume-based structure. Hospitals are incentivized financially to meet quality metrics where evidence has shown unnecessary spending owing to lesser quality care. Americans, and especially the elderly (who use the majority of hospital services), benefit from initiatives such as reducing avoidable hospital readmissions, reducing hospital-acquired illnesses, increased quality and efficiency from bundled payment systems, aligning providers to offer more coordinated care, and improved physician quality reporting.6 Another way elderly patients clearly benefit from the ACA is through its provisions to improve health care delivery. The ACA promotes health care through Accountable Care Organizations, a care model where there are shared savings when hospitals engage in more coordinated teambased care, reducing duplicate services.6 Perhaps, the most direct win for the elderly is the closing of the Medicare Prescription Drug Plan Coverage Gap also known as the “donut hole” in Medicare Part D. Pre-ACA, Medicare recipients were responsible for a deductible (approximately $300), and then received 75% drug coverage from Medicare up to approximately $2700. Then, from $2700 to about $6200, they received zero coverage. It was not until they reached over about $6200 in drug costs did Medicare kick back in at 95% coverage. The ACA will close this gap over time. In 2010, anyone who reached his or her deductible received a $250 rebate. Then in 2011, drug companies started discounting most brand name drugs by 50%. In 2013, federal government subsidies began that will peak in 2020 at 25% coverage. The end result is that by 2020, most brand name drugs will cost Medicare recipients 25% after their deductible. A report from CMS in 2012 states that the average savings per Medicare beneficiary will be approximately $5000 through 2022. Those who have higher prescription drug requirements stand to save even more—over $18,000.7 Under the ACA, Medicare Part B (Outpatient Services) also received an overhaul that benefitted seniors. Preventative services that traditionally fell under a deductible or were subject to coinsurance became free. CMS estimates that 34.1 million Americans received Z1 free preventative service in 2012 under Medicare.7



How the Elderly Lose With the ACA

Critics of the ACA have speculated that Medicare cost savings will ultimately result in less benefit to Medicare recipients through reduced www.anesthesiaclinics.com

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access. Hospitals, skilled nursing, home health, and hospice facilities are receiving less payments for the same services. Even pre-ACA, Medicare paid a fraction of the payment that a private insurer would pay for the same services. The financial strain will therefore result in more facilities refusal to participate in the Medicare program, creating a health care access issue where seniors have been waiting for months to get care from the few providers who accept Medicare. It is also evident that the massive expansion of Medicaid will compound the already challenging access issue. With up to 15 million new Medicaid beneficiaries but no new providers to care for these patients, it has been postulated that the Medicaid recipient will have the coverage but will be even harder pressed to find a provider. In an effort to strengthen the Medicaid program and increase access for Medicaid patients, the ACA does call for increased Medicaid payment rates and significantly more financial support to the Children’s Insurance Health Program. ’

How Will it All Shake Out?

With 2014 marking the fourth year since the PPACA first passed, the real consequences are still largely theoretical. In addition, there are likely unintentional consequences that have yet to be realized. One thing is for certain: it will be fascinating to see how the PPACA unfolds in practice and even more so how it shapes our elderly populations’ health, as this is the population that is growing the fastest, using the vast majority of health care resources.

The authors have no conflicts of interest to disclose.



References

1. A profile of older Americans: 2012. US Department of Health and Human Services, Administration on Aging. Available at: http://www.aoa.gov/Aging_Statistics/Profile/ 2012/docs/2012profile.pdf. Accessed September 30, 2013. 2. Tate NJ. Obama Care Survival Guide. West Palm Beach, FL: Humanix Books; 2013. 3. Estimated financial effects of the “Patient Protection and Affordable Care Act,” as Amended. Richard S. Foster, Office of the Actuary, CMS. Available at: http:// www.cms.gov/Research-Statistics-Data-and-Systems/Research/ActuarialStudies/down loads/PPACA_2010-04-22.pdf. Accessed October 19, 2013. 4. Affordable Care Act update: implementing Medicare Cost Savings [CMS]. Available at: http://www.cms.gov/apps/docs/aca-update-implementing-medicare-costs-savings.pdf. Accessed October 14, 2013. 5. 2013 annual report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds [CMS]. Available at: http:// downloads.cms.gov/files/TR2013.pdf. Accessed October 19, 2013. www.anesthesiaclinics.com

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6. The Affordable Care Act: lowering Medicare costs by improving care. Efforts will save over $200 billion for taxpayers through 2016, nearly $60 billion for beneficiaries in traditional Medicare [CMS]. Available at: http://www.cms.gov/apps/files/aca-savingsreport-2012.pdf. Accessed October 14, 2013. 7. The Affordable Care Act: a stronger Medicare Program [CMS]. Available at: http:// www.cms.gov/apps/files/Medicarereport2012.pdf. Accessed October 19, 2013.

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Patient Protection and Affordable Care Act (PPACA): effect on the fastest growing population, the elderly.

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