I have lost track of the number of clients who have asked me how Obamacare will affect their Medicare Advantage plan. They saw so many advertisements during the election campaign about how millions of seniors will lose their Medicare Advantage plan, and how $700 billion is being “stolen” from Medicare to be used for Obamacare. They are worried.

I tell these folks that I read a lot about Medicare and Obamacare – and I don’t think Medicare Advantage is going anywhere but up. In fact, since 2010, when Obamacare was passed into law, Medicare Advantage enrollment has grown 28%. On top of that, enrollment in Medicare Advantage is expected to grow 11% from 2012 to 2013.

I tell people that Obamacare does cut payments to Medicare Advantage plans because, since 2006,  Advantage plans have been overpaid by 10 – 14% each year. This has been very good for insurance companies’ profits, but it is not good for the Medicare budget.  But the reductions in payments to Medicare Advantage plans are taking place over several years so there is no big financial shock that would drive insurance companies out of the business.

According to CMS (Centers for Medicare and Medicaid Services), Obamacare payment cuts have had no negative effect on Medicare Advantage (MA) premiums and co-pays.  Of course, MA co-pays have been inching up each year – but that was happening before Obamacare.

I have written previously about how big insurance companies like United, Aetna, Wellpoint, and Cigna have spent billions of dollars buying Medicare Advantage plans. They seem pretty sure the Medicare Advantage business will be generating profits for years to come.

In Maricopa, Pima, and Pinal counties in Arizona, nearly 50% of Medicare beneficiaries are enrolled in Medicare Advantage plans. In Florida, California, Pennsylvania, and several other states,Medicare Advantage is huge. (Note: Florida Advantage plans are much better than what we have here in Arizona.) With over 12 million people enrolled in Medicare Advantage plans across the country, I don’t see any politicians (who want to keep their jobs) pushing to end Medicare Advantage.

Based on all the evidence I’ve seen, I’m pretty sure Medicare Advantage is here to stay.

If the Supreme Court rules the Affordable Care Act is unconstitutional, and the entire 2700 pages of rules, regulations, policies and programs must be stopped……..what happens then?

I was reading an insurance industry newsletter today that pointed out how a negative ruling will create chaos for Medicare, Medicare Advantage, and Part D.

Medicare Advantage should be especially hard hit because “bids” for 2013 plans must be submitted on Monday, June 4th, and these bids are based on payments, policies and rules that are part of the Affordable Care Act. If the rules of the game change at the end of June, when the Supreme Court ruling is expected, do the plans have to start all over again with their plan design and pricing?

How would Medicare Advantage plans make changes based on the new/old rules and get all this done in time for CMS (Centers for Medicare and Medicaid) to review and approve revised bids? The plans then prepare their marketing materials, all of which must be reviewed and approved by CMS. Materials must be printed and mailed to current plan members by the end of September.  Four months of work would have to be crammed into the month of August if plans are required to adjust to a negative Supreme Court ruling on the Affordable Care Act.

If the entire law is canceled by the Supreme Court, what happens to the hundreds (thousands?) of rules and payment policies that have already begun? Health and Human Services Secretary Kathleen Sebelius wrote to Congress outlining potential consequences last year. At that time, she said the administration might have to suspend payments to Medicare Advantage plans.

Just a few of the Medicare-related rules that are part of the Affordable Care Act are:

*Reduced payments to Medicare Advantage plans – but offset by star rating bonus payments;

*50% discounts on brand drug costs for people in the Part D donut hole;

*Changes to the donut hole to make it smaller and less costly to seniors;

*10% increase in payment rates for primary care doctors;

*Reduced payment rates for certain specialists and tests;

*A long list of preventive services newly covered by Medicare, including an annual wellness exam.

A recent article in the Boston Globe said:

Medicare’s payment system, the unseen but vital network that handles 100 million monthly claims, could freeze up if President Obama’s health care law is summarily overturned, the administration has quietly informed the courts.

Although Obama’s overhaul made significant cuts to providers and improved prescription and preventive benefits, Medicare was overlooked in Supreme Court arguments that focused on the law’s controversial requirement that individuals carry health insurance.

In Pima and Maricopa counties, 45% of Medicare beneficiaries are enrolled in Medicare Advantage plans. In Pinal County, 49% are enrolled in Medicare Advantage. This could be a very interesting and crazy time for Medicare Advantage in Arizona and around the country!

The Affordable Care Act (ACA) included a number of changes to Medicare that are already helping seniors and people with disabilities.  Medicare now covers more preventive services at no cost to the patient, including an annual wellness exam.  Many of these preventive services can identify serious and chronic diseases that would cost Medicare billions of dollars if they go undiagnosed and untreated.

According to a press release from CMS (Centers for Medicare and Medicaid Services):

• 18,907,851 people with Original Medicare, or 55.6 percent of those enrolled in the program, received one or more free preventive services this year, through the end of August.
• During the same time period, 1,295,373 Americans with Original Medicare have taken advantage of the new Annual Wellness Visit, up from 1.06 million through the end of July and 780,000 through mid-June.

 Help with Part D high drug costs:

Because of the Affordable Care Act,  nearly 1.3 million people have received a 50 percent discount on their brand name prescription drugs when they hit the donut hole, saving a total of $660 million so far this year.

For people who hit the coverage gap (known as the “donut hole”):

• 1.28 million have received discounts on brand-name drugs this year through the end of July, up from 899,000 through the end of June and 478,000 through the end of May;
• These discounts have totaled $660 million in savings for seniors and people with disabilities so far this year; up from $462 million through June and $260 million through May;
• Individuals who have received this discount saved an average of $517 so far this year.

For state-by-state information on utilization of free preventive services and the Annual Wellness Visit, please visit http://www.cms.gov/NewMedia/02_preventive.asp