Spotlight on Medicare’s Financial Stability
The Supreme Court will review the constitutionality of the Affordable Care Act (ACA) this term in California v. Texas, with oral argument scheduled for November 10, 2020. This ongoing litigation challenges the ACA’s individual mandate, but raises questions about the entire law’s survival, and could result in dismantling the entire ACA.
While the ACA’s changes to the individual insurance market and its expansion of Medicaid have been the focus of much media coverage, the law has affected every part of the health care system, including Medicare. The ACA is woven into Medicare, with over 165 provisions affecting the program. Many of these provisions help beneficiaries and strengthen Medicare’s financial well-being. Striking down the ACA would have disastrous ramifications for Medicare beneficiaries and the U.S. health care system as a whole. In a series of CMA Alerts leading up to the Supreme Court oral argument, the Center is highlighting some of the harm that undoing the ACA would bring to Medicare and Medicare beneficiaries.
The ACA strengthened the long-term financial stability of the Medicare program, improving the program’s sustainability. This was accomplished in part by reducing excessive payments to private Medicare Advantage plans, bringing those payments closer to the average spending for beneficiaries in traditional/original Medicare. Dismantling the ACA could thus eliminate those savings and increase Medicare spending by approximately $350 billion over the ten years of 2016- 2025. This would accelerate the insolvency of the Medicare Trust Fund.
Undoing the ACA would jeopardize these fiscal gains and harm Medicare’s long term financial stability. At the very least, it would cause fiscal and administrative chaos in the health care sector as an entire payment system would be thrown into uncertainty. The Center for Medicare Advocacy strongly opposes dismantling the ACA and the lawsuit that seeks to do so on unmerited grounds. The Center joined AARP and Justice in Aging in submitting an amicus brief in support of California and the other states defending the ACA against the lawsuit now at the Supreme Court. The brief highlights the ACA’s key protections for older adults and the devastating consequences that would ensue if the law is nullified.
- Kaiser Family Foundation, “Potential Impact of California v. Texas Decision on Key Provisions of the Affordable Care Act” (updated September 2020).
- Center on Budget and Policy Priorities, “ACA Repeal Lawsuit Would Cut Taxes for Top 0.1 Percent by an Average of $198,000, Weaken Medicare Trust Fund” (October 2020).
- Congressional Budget Office, “Budgetary and Economic Effects of Repealing the Affordable Care Act,” (June 2015), analysis in response to Congressional ACA repeal efforts: “CBO and JCT cannot anticipate with any certainty what choices federal agencies would make to implement such legislation to repeal the ACA. Medicare, for example, would be affected in several fairly complicated ways. In many cases, the program’s payment rates reflect base payment amounts that are increased or updated each year according to formulas specified in law. The ACA reduced those updates, and repealing the relevant provisions would clearly cancel the reductions that are currently scheduled to take place in future years. The complication that arises is that the base payment amounts to which the updates will apply are currently lower than they would have been had the ACA never been enacted. If the ACA was repealed, it is unclear whether those base amounts would be adjusted upward so that future payments would not be affected by past update reductions. In other cases, repealing the ACA would require payment mechanisms for Medicare to revert to those used under prior law, but the Department of Health and Human Services (HHS) would need to decide how to calculate those payments once the law was repealed. (Legislation to repeal the ACA could reduce the scope of such discretion, however, by specifying the manner of restoration or revival of the provisions of prior law.)”
- Kaiser Family Foundation, “A Primer on Medicare: Key Facts About the Medicare Program and the People it Covers,” (March 2015).
- GAO Report, “Continuous Insurance before Enrollment Associated with Better Health and Lower Program Spending,” (December 2013).
- Center statement concerning the fate of the ACA in light of Supreme Court nomination hearings (October 2020).
October 29, 2020 – K. Kertesz