Today, the U.S. Department of Health and Human Services celebrates the 45th anniversary of Medicare, the Federal health care program that guarantees health security and coverage for people over 65 and younger people with disabilities.

“Forty-five years ago today, President Lyndon B. Johnson signed Medicare into law, giving former President Harry S. Truman and his wife Bess the first Medicare cards as the first enrolled beneficiaries,” said Health and Human Services Secretary Sebelius.  “Today’s Medicare builds on the promise made by President Johnson and provides more than 44 million seniors and people with disabilities with guaranteed health care benefits and higher quality care than ever before.”

Since Medicare was first enacted in 1965, Medicare has had a history of improving and strengthening the program.  The Balanced Budget Act of 1997 offered Medicare beneficiaries new coverage choices through Medicare Part C, now known as Medicare Advantage.  In 2003, the Medicare Modernization Act improved the affordability of prescription drugs through the Medicare Part D prescription drug program.
 
From a Department of Health and Human Services press release:

This year, the Affordable Care Act represents another step forward for the Medicare program.  The law ensures that Medicare beneficiaries will continue to receive their guaranteed benefits and will provide new benefits and lower costs, including closing the prescription drug coverage gap, eliminating co-pays and cost-sharing for most preventive screenings and providing greater coordination of care among providers.  In addition, the Affordable Care Act will extend the life of the Medicare Trust Funds. 

Some of the improvements Medicare beneficiaries will see under the Affordable Care Act include:
 
Thousands in Savings by Closing the Medicare “Donut Hole”
More than 8 million seniors in 2007 hit the “donut hole,” which is the gap in prescription drug coverage in Medicare Part D.  This year, eligible beneficiaries who hit the donut hole will receive a one-time, tax-free $250 rebate check.  Beginning in 2011, the Act institutes a 50 percent discount on brand name drugs in the donut hole, and the Act will close the donut hole for all prescription drugs by 2020.
 
Reduces Unwarranted Subsidies to Insurance Companies
Today, Medicare pays Medicare Advantage insurance companies over $1,000 more per person on average than Original Medicare. These additional payments are paid for in part by increased premiums by all Medicare beneficiaries—including the 77% of seniors not enrolled in a Medicare Advantage plan. The Affordable Care Act puts Medicare Advantage plan payments more in line with the costs for the original Medicare program and provides new incentives for health plans that improve quality and enrollee satisfaction in Medicare Advantage plans.  Medicare’s guaranteed benefits will be protected, and reducing these unwarranted subsidies will save Medicare more than $150 billion over 10 years.
 
Strengthens the Financial Health of Medicare
The Affordable Care Act strengthens Medicare by investing in fighting waste, fraud, and abuse and reforms payments to reduce harmful and unnecessary hospital admissions and health care acquired infections. The law also improves care coordination to improve patient safety and quality of care. Together, these proposals will extend the financial health of Medicare by 12 years. 
 
 
Preventive Care for Better Health
The new law eliminates deductibles, copayments, and other cost-sharing for most preventive care in Medicare, and provides free annual wellness check-ups starting in 2011. Today, seniors must pay 20 percent of the cost of many preventive services and office visits.
 
Affordable Long-Term Care
The law creates a voluntary insurance program, which will provide a cash benefit to help seniors and people with disabilities obtain services and supports that will help them to remain in their homes and communities.
 
Control Chronic Disease
The Affordable Care Act makes critical investments in innovations that improve the quality of care that seniors receive such as medical homes and care coordination and improves the delivery of care for beneficiaries with one or more chronic conditions.
 
Promotes Better Care After a Hospital Discharge
The law links payments between hospitals and other care facilities to promote more effective transitional care following discharge from the hospital and encourages investments in hospital discharge planning.
 
Improves Quality of Care
The Affordable Care Act invests in developing and reporting quality of care measures across all providers to help beneficiaries make more informed choices among providers for the care they may need. The law also creates incentives to reward providers that meet quality goals or show significant progress in improving patient outcomes.  This focus on quality improvement will move our health system toward one that rewards better care rather than more care.

Predictions that Medicare Advantage will disappear seem to be very wrong. I am one who predicted that companies would be getting out of the Medicare Advantage business due to cuts in funding and limits on profits that have been imposed by Democrats.   Here is an article I found on FoxBusiness.com that debunks my theory.

NEW YORK (Reuters) – WellPoint Inc wants to expand its Medicare business to take advantage of the post-war baby boom generation becoming eligible for the U.S. government-sponsored health program, the health insurer’s chief financial officer said on Wednesday.

WellPoint can “absolutely” compete with the two biggest Medicare players — UnitedHealth Group Inc and Humana Inc — and will take market share over the next three to five years, WellPoint CFO Wayne DeVeydt said in an interview.

“It’s a space that we will want to play in and we will want to expand in,” DeVeydt said. “You will definitely see us take a more prominent role prospectively in the Medicare sector.”

Some investors have been bearish on Medicare Advantage — the growing part of the program run by private companies — because under the new healthcare reform law, Medicare payments to insurers will be frozen next year and be reduced beginning in 2012.

But DeVeydt called Medicare a “huge growth opportunity for us.” WellPoint, the largest U.S. health insurer by membership, operates in 14 core states, and in those states, the company anticipates about 40 percent of its existing membership will become eligible for Medicare in the next few years.

“Even with potential margin contraction … it is a space where the population is going,” DeVeydt said, speaking after the company posted second-quarter results on Wednesday.

WellPoint has about 350,000 Medicare Advantage members, which substantially trails UnitedHealth and Humana.

But DeVeydt said WellPoint’s business providing supplemental Medicare plans — for which it has about 850,000 members, placing it second behind UnitedHealth — puts it in a good position, as do its extensive physician networks in its core states.

“We know we that we offer products that seniors want,” DeVeydt said. “We think we can compete extremely well … and with the size of the population aging in, we believe we’ll be a net taker over the next, say, three to five years.”

Asked if WellPoint could compete on a national scale with UnitedHealth and Humana, DeVeydt said: “Absolutely.”

DeVeydt said the company would seek Medicare growth both organically and through deals. Speaking about the merger climate generally, DeVeydt said while there is a lot of discussion, too much uncertainty still exists about the fallout from the new healthcare reform law.

NOTE: Wellpoint is a minor player in the Arizona Medicare Advantage market.  Unicare is a Wellpoint company offering private-fee-for-service Medicare Advantage plans in Arizona. These types of Medicare Advantage plans are supposed to be canceled in 2011 unless the company creates a provider network.

Reuters reported that UnitedHealth Group Inc has posted a higher-than-expected second-quarter profit, helped by growth in its Medicare Advantage plans for elderly and low-income Americans.

For the second quarter (April, May, June), UnitedHealth said net income (profit) increased to $1.12 billion from $859 million a year earlier. Revenue rose 7.4 percent to $23.26 billion.

UnitedHealth is the biggest provider of Medicare Advantage plans, and its Medicare Advantage membership rose 17 percent from 2009 to 2010. UnitedHealth’s Medicare Advantage revenue grew 13 percent to $9 billion.

Revenue in its health plans for low-income Medicaid recipients jumped 21 percent to $2.5 billion. The company’s Medicaid membership increased 16 percent.

Reuters analysis:

UnitedHealth kicked off what is expected to be a strong earnings reporting season for health insurers. However, Wall Street enthusiasm for the industry is expected to be tempered as investors question whether its performance will be sustainable under the new U.S. healthcare reform law.

Wall Street is concerned about the hit to profits next year from new regulations that will mandate how much insurers must spend on medical costs. Government regulators are also fighting back against proposed premium rate increases by the insurers.

Longer term, healthcare reforms are designed to provide insurance coverage for an additional 32 million Americans, many through the Medicaid program for low-income Americans and UnitedHealth is well-positioned in this market.

NOTE:  UnitedHealth Group companies in Arizona are: Secure Horizons Medicare Advantage plans, Evercare Medicare Advantage plans, and APIPA Medicare Advantage plans and AHCCCS health plans.