Seniors Win Big in Court's Obamacare Ruling

Opinion preserves broad menu of expanded healthcare services and federal financial supports.

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Putting aside political views and inevitable legislative challenges still to come, seniors are big winners in the U.S. Supreme Court's 5-4 decision supporting Obamacare. The court upheld just about the entire law, including its most controversial feature—the individual mandate that will by 2014 require nearly every American to have health insurance or pay a penalty to the IRS.

Doctor with patient at medical exam table

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In the process of providing health insurance to more people, the mandate will generate more premium dollars to private insurers. These funds, in turn, will be necessary so insurers can afford the law's guarantees: No one can be denied health insurance because of a pre-existing condition and insurers can't gouge such people with unreasonable premiums. The law also limits insurers' ability to impose age-related premium increases for private coverage.

Uninsured older Americans not yet eligible for Medicare will be big beneficiaries. The specifics of their private health insurance options will probably differ, depending on where they live. The law requires the development of state-based insurance exchanges. But the form and insurer participation in those exchanges are unclear, as many states have held back on developing them until legal challenges to the law were resolved.

The court upheld all provisions of the Affordable Care Act except its treatment of states that decide not to implement the act's sizable expansion of Medicaid benefits to their eligible residents. The federal government would pay for all of these added benefits at first and after 2020, would still pay for 90 percent of them. But the states in theory had the option to refuse to participate in the new programs.

The law gave the federal government the authority to cut off a state's total Medicaid funding if it didn't go along with the expansions. The court viewed this as economic coercion ("dragooning" was the colorful language used in the opinion) and disallowed it. Noncompliant states thus will be able to continue providing current Medicaid services and keep their current funding.

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Among the provisions that have already taken effect are two measures that are currently helping Medicare beneficiaries:

Medicare drug prices. This is one of the biggest direct Medicare benefits under health reform. Over several years, the law is set to reduce the amount of money that Medicare drug plans (Part D of Medicare) can charge for drugs when their coverage lapses in what's known as the "doughnut hole." Price reductions that have already taken effect have saved Medicare consumers billions of dollars in drug costs, the government estimates.

Preventive health services. Health reform greatly expanded the menu of free preventive services to Medicare consumers. The Centers for Medicare & Medicaid Services (CMS) said more than 14 million Medicare users get at least one free preventive health service during the first five months of 2012.

In addition, the law includes potentially far-reaching changes that would make it easier for seniors to receive medical services in their homes instead of institutional settings like nursing homes.

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Senior rights groups were uniformly upbeat about the ruling. "You will get more and you will pay less for it," said Max Richtman, head of the National Committee to Preserve Social Security & Medicare. Seniors already have saved billions in drug prices, he noted. "The average Medicare beneficiary will continue to save about $650 a year," he added. "That's real money, especially to seniors."

It's also real money to taxpayers. Ideological opposition to government-mandated health insurance has received the most attention in efforts to overturn the law. Going forward, affordability issues are likely to emerge as a powerful ongoing concern about implementing the law.

As part of the push for the law's original approval in 2010, the Congressional Budget Office (CBO) played a central role in determining that the legislation would not increase the federal deficit and actually would lower the nation's healthcare bill over time.

In the past two years, however, the legislation's price tag has increased. After the court ruled, the CBO said it would once again "score" the law's budget impact but expected the review "to take some time." If the CBO were to find that the law now adds to federal deficits, the fate of some provisions could be caught up in broader discussions about the futures of Medicare, Medicaid, and even Social Security.