White House: Health reform will save Medicare $3,500 per patient

Kathleen Sebelius

WASHINGTON — Proclaiming the potential cost-saving benefits of its signature legislative accomplishment, the massive health-reform bill enacted earlier this year, the White House is projecting that the Affordable Care Act will reduce average costs per patient enrolled in Medicare by thousands of dollars over the next decade.

The projections were released in November by the Department of Health and Human Services. Citing the results of a new study of the reform law’s impact, HHS estimated that its application will save Medicare an average of more than $3,500 in health costs per patient over the next 10 years by shifting toward more preventive health services, reducing waste and fraud and improving the oversight and efficiency of health spending.

Savings will be even higher — as much as $12,300 over the next 10 years — for seniors and people with disabilities who have high prescription drug costs, HHS secretary Kathleen Sebelius asserted. She said the law — signed by President Obama on March 23 as the Patient Protection and Affordable Care Act and amended and renamed on March 30 as the Affordable Care Act — will save both patients and taxpayers money.

“The Affordable Care Act makes Medicare stronger and reduces the burden of healthcare costs on some of our most vulnerable citizens,” Sebelius said. “The law improves benefits for seniors and people with beneficiaries who rely on Medicare, and ensures that Medicare will be there for current and future generations by extending the life of the Medicare Trust Fund.”

HHS is basing its cost-saving projections on a federal analysis showing that the Affordable Care Act helps lower costs for those on Medicare “by slowing the growth of cost-sharing in Medicare,” according to the agency.

“Closing the Part D coverage gap known as the ‘doughnut hole’ will produce the greatest cost savings,” HHS noted. “Already, more than 1.8 million seniors and people with disabilities who have reached the doughnut hole in 2010 received a one-time $250 rebate check, and checks will continue to be distributed to those who enter the doughnut hole this year.”

The agency added, “Next year, people in the doughnut hole will receive 50% discounts on covered brand-name Part D prescription drugs. Also starting next year, seniors and people with disabilities on Medicare will have access to a number of recommended preventive services and annual wellness visits at no additional cost.”

Savings will be greatest, Sebelius said, for those with costly medical conditions or high prescription drug costs. HHS projected that total savings per beneficiary enrolled in traditional Medicare will come to about $86 in 2011, rising to $649 in 2020. For a beneficiary with spending in the doughnut hole, estimated savings will increase from $553 in 2011 to $2,217 in 2020, according to the study.

“The savings that seniors and people with disabilities on Medicare are seeing are due to critical improvements the Affordable Care Act makes to Medicare,” said Sherry Glied, assistant secretary for planning and evaluation for HHS. “Reducing waste, fraud and abuse; improving the quality of care beneficiaries receive; and making the program more efficient all contribute to lower cost increases across the system.”

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