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What Our National Budget Fight Means for Medicare

When March 1 came and went, across-the-board cuts in our national budget took effect.  Some of those hit Medicare along with other health programs for U.S. citizens.  These cuts are the remnants of a deal that was cut to avert what was commonly labeled a “fiscal cliff.”

Cuts Have Been Coming since 2011

The Budget Control Act of 2011 was set to hit at the end of 2012 with significant spending reductions.  That would have ended a temporary payroll tax cut, which could have raised taxes two percent for most people.  It would have also ended some business tax breaks and the tax reductions former President Bush gave people with high incomes.  That fiscal cliff fight put off some major cuts until March 1.

How Bad Are the Remnants of the Fiscal Cliff?

Those remaining cuts did kick in the first of March and could take more than $85.4 billion out of the national budget this year.  About 12 percent, or about or $9.9 billion, is to come out of Medicare.

That involves smaller payments to doctors and other health care providers that work for Medicare beneficiaries. Two-percent fee reductions are to begin April 1.  And, the cuts also apply to providers of Medicare Advantage plans and Part D prescription drug plans.

Putting Today’s Cuts in Historical Perspective

While two percent doesn’t sound like much, Medicare payments for doctors have only increased four percent since 2001.  Health care costs actually rose by more like 20 percent during that time period.  One could argue that’s a gap of 18 percent that health care providers want to close.

Which Services Are Changing this Year?

Medicare Part A and B benefits won’t change this year.  Neither will Part D subsidies that help people with low incomes.  While Social Security and disability payments won’t change either, some Social Security offices may close.  Sadly, it already has a shocking backlog of disability claims, so that could get even worse.

Other benefits like Medicaid, SNAP (the food stamps program), Supplemental Security Income (SSI), and Veterans Affairs compensation payments are exempt from cuts.

Meals on Wheels that brings food to people who have trouble leaving home could deliver up to four million fewer meals, but the immediate effect is still unclear.

Our National Parks Service is also taking a hit that will likely mean fewer open hours and services.  If you were planning to see a national park, check with them in advance.

Wiley Long is founder and president of Medigap Advisors, and is passionate about helping people navigate the confusing waters of Medicare. He is the author of The Medicare Playbook: Designing Your Successful Health Coverage Strategy, a clear and simple explanation so you can make the most of your Medicare coverage. For more information visit www.MediGapAdvisors.com.

 

 
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