Seniors Anxious Over Health Care Overhaul

Seniors aren't breaking out the champagne for President Barack Obama's health care law, and for good reason.

While Democrats hail the overhaul as their greatest health care achievement since Medicare, seniors fear it's a raid on that same giant health care program - a bedrock of retirement security - in order to pay for covering younger, uninsured workers and their families.

There's no doubt that broad cuts in projected Medicare payments to insurance plans, hospitals, nursing homes and other service providers will sting. What hasn't sunk in yet is that the new law also improves the lot of many Medicare beneficiaries. Obama is hoping that most will eventually conclude the plusses outweigh the minuses.

Keenly aware that this is a congressional election year, Democrats structured the law so virtually all the cuts start next year and take effect only gradually. For this year, the law provides a sweetener. More than 3 million seniors who have been falling into a Medicare prescription coverage gap will get a $250 rebate, a down payment on closing the "doughnut hole."

Nonetheless, seniors are anxious.

"I'm afraid from the little I've heard that it's not good for seniors," said Muriel Couzon, 86, a retired supervisory social worker from New York City. A Democrat, Couzon says the legislation could affect her vote this fall: "I have to see what it will do to me and other seniors like me."

It's going to take a while before the verdict is in. Change will come slowly to Medicare, which covers 46 million seniors and disabled people. There will be winners and losers:

Gross cuts in projected payments to insurers, hospitals and other providers total $533 billion over 10 years, according to a preliminary analysis by the Kaiser Family Foundation. About $100 billion will be plowed back into Medicare, leaving a net cut of $428 billion. Medicare spending will continue to grow under the law, just not as fast. The reductions are smaller (about 6 percent) than Democratic President Bill Clinton and a Republican Congress came up with in 1997 (12 percent). Still, they're deep enough that some experts believe a future Congress will reconsider them.

The law strengthens traditional Medicare, which covers about three-fourths of seniors, by improving preventive care and increasing payments to frontline primary care doctors and nurses serving as medical coordinators. But it gradually reduces generous government subsidies to private insurance plans, Medicare alternatives that have lately gained popularity. That could lead to an exodus from the private plans.

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The most significant new benefit - closing Medicare's prescription coverage gap - won't be fully phased in until 2020. That's a long time if you're old and frail. The coverage gap starts after the first $2,830 spent on medications in a year. Seniors then pay entirely out of their pocket until they have spent $4,550, when the government starts picking up 95 percent of the tab. After the rebate this year, seniors in the gap will get a 50 percent discount on brand name drugs in 2011, and a smaller break on generics. The discounts gradually ramp up until the "doughnut hole" is closed.

One change has received little attention but could have major consequences. The law authorizes a variety of experiments to provide better care for seniors struggling with multiple chronic illnesses - about half the program's beneficiaries. Prominent voices in the medical community have been clamoring for the government to use Medicare as a laboratory for change. If the approach succeeds, fewer people may end up in the hospital for bad drug reactions and other common problems.

"It's going to be very important for Medicare beneficiaries to understand that on the whole, this is not the disaster some people have painted it to be," said health economist Marilyn Moon, who as a former Medicare trustee helped oversee program finances from 1995 through 2000. "It is a bit of a mixed bag, but I think on balance it is going to put the program in a better position, over a long period of time."

Her one major caveat: Many seniors in private insurance plans under Medicare Advantage will face higher premiums and reduced benefits as subsidies are scaled back over three to six years to bring the private plans' costs in line with those of traditional Medicare.

"Beneficiaries will notice that, and they're going to be unhappy because it's a takeaway," said Moon, who directs the health care program at the American Institutes for Research.

Government payments to the private plans - about 10 percent richer than per-person spending for traditional Medicare - have enabled them to offer comprehensive coverage for less. Seniors flocked to sign up, boosting enrollment to about one quarter of all Medicare beneficiaries.

The same cuts will benefit seniors in traditional Medicare, who have been paying higher monthly premiums to support the government's generosity. There's also a potential silver lining for private plans. The law allows them to earn bonus payments for high quality.

Such nuances got lost in an emotional debate that veered off into "death panels" and "pulling the plug on grandma." Nothing that drastic was ever in the bill. Still, Republicans accuse Obama of slashing Medicare, and polls show the message has stuck.

An Associated Press-GfK survey in March found that 54 percent of seniors opposed the legislation then taking final shape in Congress, compared with 36 percent of people age 18-50.

"We've got an education job to do with seniors," said Sen. Chris Dodd, D-Conn. "I think they are probably the least open to seeing the benefits."

AARP and other major organizations representing seniors supported the law, despite the polls. Now they're planning a sustained outreach campaign to call attention to the legislation's benefits. It might not be an easy sale.

Details of the Bill:

Summary of What's in the Bill
Uninsured? What the New Bill Means for You
Already Insured? Get Ready to Pay More
Health Reform Tweaks Seniors' Medicare
Primary Care Doctors Ask: Is it Worth It?
Feds Eye Big Savings from Health Reform
How Health Reform Affects Small Businesses
Provisions Which Take Effect in Short-Term
Read the Text (PDF): Complete Senate Bill | Reconciliation Measure