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What are Medicare cuts?

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Quick Answer

Medicare cuts refer to the Affordable Care Act's mandate to cut the Medicare budget by $716 billion over a 10-year period from 2012 to 2022. This occurs by reducing annual increases in payments to various programs such as Medicare Advantage, home health services, hospices, hospital costs and skilled nursing services. Payments to hospitals reduce by $260 billion in 10 years, and Medicare Advantage receives $156 billion less funding.

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Full Answer

Other cuts include $66 billion to home health care, $39 billion to skilled nurses and $17 billion to hospice care. Despite these cuts, the costs of Medicare are expected to rise from $500 billion in 2012 to $900 billion in 2022. Medicare costs are expected to grow slower than usual over that timespan because of the Affordable Care Act.

The Obama administration, in early 2014, proposed cutting payments to private Medicare Advantage plans by 1.9 percent in 2015. Instead, the administration bowed to lobbyist pressure and gave the program an influx of 0.4 percent more payments in the 2015 fiscal year.

Home health services took cuts in November 2014. Medicare payments to those services dropped by 14 percent from late 2014 and for the next four years. In 2012, Medicare spent $18 billion on home health care costs for nurses to go into the homes of 3.5 million patients to help with medications, rehabilitation and postsurgical care.

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