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We’ve Got the Scoop on How Medicare Cuts Affect Senior Healthcare

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scoop on medicare cuts and senior healthcare

At first glance, the reduction of $716 billion in Medicare funding over the course of the next 10 years comes off as treachery. It's the most severe and costly cut to the program yet. And if your elderly parents or other loved ones rely on Medicare for health coverage, it will have a direct impact on your family.

However, while there will be noticeable differences, many of them are actually for the better, benefitting your loved ones in some important, and vital, ways.

How the Reductions Work

The cornerstone of any health care plan, senior care or otherwise, is to provide coverage when something is wrong– illness, accident, disease – and to aid in recovery. To date, much of the senior healthcare landscape has been filled with doctors, nurses, and facilities meant to provide care after a health event has occur, whether something as a common as the flu or a more severe diagnosis like dementia. With the introduction and implementation of the Affordable Care Act (ACA), both as a whole and in relation to Medicare, however, the focus has shifted to preventative care.

According to the ACA, the $716 billion in cuts that will take place of over the course of the next 10 years break down as follows (though these numbers do not reflect the total sum to be reduced):

  • It is estimated that Medicare spending would be reduced by $716 billion due to the stoppage of annual increases in reimbursement for Medicare Advantage, as well as hospital costs, hospices, home health services, and skilled nursing services.
  • Hospitals will see the most reductions – close to $260 billion over the next decade.
  • Medicare Advantage will see about $156 billion less over the same amount of time.
  • Home health will receive $66 billion less
  • Hospice Care will see a decrease of $17 billion
  • There will $39 billion reduction to skilled nursing services, as well.

The key to these cuts– both why they are being made and what they're hoped to accomplish– is to keep Medicare costs from growing at the same rate that they have been, effectively extending the life of the Medicare trust fund to the year 2026.

Yes, there may be coverage lost, but the gains are significant and worth taking the time to understand.

How the Cuts Affect Seniors

There’s no way around it– many programs and hospitals will see reductions. Doctors and physicians will be dropped from network coverage. And your loved ones may be affected in some unforeseen ways. However, it's not all bad news.

The reduction of payments, through penalties, to certain hospitals will serve as the necessary push for those hospitals with the highest rates of hospital-acquired conditions and readmissions to improve their care, both initially and follow-up.

In addition to quality of care, there have been legitimate concerns about the availability of care for seniors. And the new penalty program than cuts funding to underperforming hospitals also seeks to push hospitals to become more efficient. If a healthcare providers must watch their expenditures more closely, then their use of available funds and supplies should see a noticeable adjustment. But it's yet to be seen whether or not that this kind of cost accounting will lead to positive changes.

What the Cuts Mean

In the long run, the cuts are meant to act as more than just triage for a troubled system that makes healthcare available for so many Americans.

The fact is that whatever loss in funding the program may see, those who rely on Medicare will see new protections and benefits that actually strengthen the quality of care received, not the loss of coverage and benefits so many feared. By encouraging doctors, physicians, and hospitals to provide stronger, better care from the start, senior healthcare has been given the opportunity to make a much needed change from reactive care, to preventative care.

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Bryan Reynolds
By
March 20, 2014
Bryan Reynolds is the Vice President of Marketing and Public Relations for Episcopal Retirement Services (ERS). Bryan is responsible for developing and implementing ERS' digital marketing strategy, and overseeing the website, social media outlets, audio and video content and online advertising. After originally attending The Ohio State University, he graduated from the College-Conservatory of Music at the University of Cincinnati, where he earned a Bachelor of fine arts focused on electronic media. Bryan loves to share his passion for technology by assisting older adults with their computer and mobile devices. He has taught several classes within ERS communities as well as at the Osher Lifelong Learning Institute run by the University of Cincinnati. He also participates on the Technology Team at ERS to help provide direction. Bryan and his wife Krista currently reside in Lebanon, Ohio with their 5 children.

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