This is the second blog on the new Health Care bill. Recognizing that a lot of the details in this bill will be decided by Federal Regulators, I will attempt to highlight the changes in chronological order. My first blog discussed the changes to be enacted in 2010. This article will highlight the changes in 2011. While trying to be thorough, this work is not to be considered totally comprehensive.

Summary for this blog – Advantage plans may not be such an advantage starting in 2011.

Three of the five major changes in 2011 concern Medicare. The attempt of these three changes is to make Medicare more financially viable.

First, there will be a restructure from Medicare to Medicare Advantage Plans. Currently Medicare pays a premium to private insurance companies who take Medicare beneficiaries as members of their plan. The members do not use Medicare but the benefits of the Insurance Plan. The Plan has to, by statute, offer benefits equivalent or better than Medicare. Up until now most of the plans have offered more comprehensive benefits than basic Medicare. There is no doubt that the payments to these plans will be reduced. The consequence to those on an Advantage Plan will be a higher premium to purchase these plans, reduced benefits in these plans, or a combination of the two. This will affect all Advantage plans in 2011. If you or a relative have one of these plans, these changes will probably be very significant.

The second Medicare change in 2011 is that any individual with an income of $85,000 or more will now have to pay a higher premium for Part D, the Prescription portion of Medicare.

Next, in 2011 pharmaceutical companies will provide a 50% discount on brand name drugs purchased in the coverage gap of Part D programs.

Finally, Medicare will start paying lower payments to hospitals in 2011. This is an agreement the Hospitals made as long as there was assurance that everyone would have Insurance in the future. Currently, Hospitals have to write off a large percentage of their billings. That won’t happen if everybody is insured in 2014, so the Hospitals made the concession to receive lower payments from Medicare.

The last two changes have little affect on the public. First, those people who have Health Savings Accounts will not be able to use them to purchase over-the-counter drugs from their Health Savings accounts. The second change is that the government will collect an annual fee from the pharmaceutical sector starting at $2.5 billion dollars in 2011. This fee increases to $4.2 billion in 2018 and then settling at $2.8 billion in 2019 and beyond. The pharmaceutical companies agreed to this in trade for a clause in the bill that there will be a twelve year ban on generic drug production for new prescriptions. The net result is that if a new prescription is developed, a generic will not be available for 12 years allowing the pharmaceuticals time to be reimbursed for research and development.

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