1

ObamaCare Closes The Donut Hole With its New Medicare

Pod 1
Melissa Luong (Purple
Narineh Manou!ian (Orange
"ordon #$ant ("re%
Nic! Creason (&lue
'$er%one (&lac!








()*+,11)-+ a.m./0rida%1 Honors Political 2cience 1 (1334
Pro5essor) Da$id 6ranga
13 December 7+13




7
Introduction
One o5 the biggest problems with Medicare is the e8istence o5 the 9donut hole.: The
donut hole is a common name gi$en to what is 5ormerl% !nown as the Part D Co$erage "ap.
During the "eorge W. &ush %ears1 &ush signed into law the Medicare Moderni;ation #ct o5
7++3 (MM# with the intention o5 creating a new co$erage on prescription drugs. This resulted
in the creation o5 the donut hole. &ush characteri;ed the MM# as 9the greatest ad$ance in health
care co$erage 5or #merica<s seniors since the 5ounding o5 Medicare: (CNN1 1+.(.7++3. &e5ore
the MM#1 there was $er% limited go$ernment assistance 5or senior citi;ens= prescription drug
costs. With rising costs o5 prescription drugs and rising numbers o5 seniors1 the MM# was
established as a means to assist with the costs o5 prescription drugs. MM#=s essential
impro$ement to Medicare was its 5ormation o5 Medicare Part D1 wherein once enrolled with a
re>uired pa%ment o5 a ?37- deductible1 seniors pa% onl% 7-@ o5 prescription drug costs up to a
co$erage limit o5 ?71AB+. #n%thing o$er this limit 5alls upon seniors to co$er out o5 poc!et until
the total out o5 poc!et e8pense reaches ?*1B-+. This gap in 5ederall% assisted prescription drug
co$erage is the donut hole. O$er time1 the donut hole earned a reputation as a 9gap: in the
co$erage o5 prescription drugs and an unnecessar% and un5air burden on Medicare >uali5iers.
Toda%1 President &arac! Obama has recentl% integrated a new uni$ersal health care co$erage 5or
all 6nited 2tates citi;ens entitled The #55ordable Care #ct (#C# or ObamaCare. ObamaCare
plans to impro$e and e$entuall% eliminate the donut hole bringing with it the second greatest
ad$ance in Medicare=s histor%.
Hypothesis
The Medicare pro$isions under ObamaCare is a bene5it to the 6.2. health care s%stem b%
3
closing the donut hole1 reducing the costs o5 health care 5or >uali5ied citi;ens1 and impro$ing the
o$erall e55icienc% o5 health care. The costs re>uired closing the donut hole and pro$iding senior
citi;ens substantial prescription drug co$erage is a good long,term in$estment 5or the 6nited
2tates. Ct is a moral prerogati$e that ta8 dollars assist citi;ens who once helped build #merica=s
empire and are now too elder to pro$ide 5or themsel$es. The Medicare pro$ision under
ObamaCare will sa$e li$es and increase the o$erall li5e e8pectanc% in the 6.2. b% pro$iding a
greater health care ser$ice to more 6.2. citi;ens.
Variables
The ultimate idea behind closing the donut hole is to reduce the out,o5,poc!et e8penses
5or senior citi;ens. The donut hole has sa$ed seniors1 9...o$er ?-.B billion on prescription drugs:
(9The #55ordable Care #ct) # 2tronger Medicare Program in 7+17:. With ObamaCare1 seniors
loo! to sa$e e$en more on brand name prescription drugs. The wa% the donut hole wor!s is that
seniors1 who needs the prescribed drugs1 ha$e a limit on the amount that are allowed to be
co$ered b% Medicare. 0or instance) 9Cn 7+131 under the standard Part D bene5it1 bene5iciaries
enter the donut hole when their out,o5,poc!et spending D not including premiums D totals
?B*7.-+ at some point during the %ear (or total bene5iciar% and plan spending o5 ?71AB+. Once
total out o5,poc!et spending reaches ?*1B-+1 bene5iciaries pa% either 5i$e percent o5 total drug
costs or ?7.4-/?4.4+ 5or each drug. (9National Committee to Preser$e 2ocial 2ecurit% and
Medicare:. There5ore1 in the donut hole1 when an Medicare >uali5ier needs prescribed drugs1
the% are re>uired to pa% out o5 their own poc!ets in order to be able to recei$e the drugs that in
man% cases !eep them 5it and ali$e. The donut hole is e8pected to slowl% close b% 7+7+ and in
ma!ing that happen1 %ear a5ter %ear1 the out o5 poc!et pa%ments 5or the elderl% becomes less and
less. The elderl% loo! to bene5it with the #C# because it would e$entuall% eliminate the donut
*
hole and 5ull% co$er the e8penses 5or prescription drugs.
'ach state has the option to choose whether or not the% want to sign up 5or ObamaCare
co$erage or not. 6p until toda%1 there ha$e been 5our Eepublican states that ha$e closed the deal
with the ObamaCare co$erage. Those states are as 5ollows) North Da!ota1 #ri;ona1 Cowa1 and
New Ferse%. Cn the article1 9The 0our "OP 2tates That Ha$e O55iciall% #dopted Obamacare1:
2ahil Gapur states1 9On #pril 141 North Da!ota "o$. Fac! Dalr%mple (E signed legislation to
e8pand Medicaid 5or about 7+1+++ new state residents.: #s o5 7+171 North Da!ota=s population
was at 4AA147(H there5ore1 the e8pansion will at least co$er about one,thirds o5 the state<s
population. Cn #ri;ona1 9On Fune 1B1 #ri;ona "o$. Fan &rewer (E enacted the Medicaid
e8pansion 5or nearl% 3++1+++ #ri;onansI: #ri;ona has a prett% large population o5 roughl%
about 4 million residentsH there5ore1 the "o$ernor o5 the state onl% chose to co$er about 3++1+++1
lea$ing the rest o5 the residents not co$ered b% the ObamaCare e8pansion. The third Eepublican
state that was to close the deal with the ObamaCare co$erage will be Cowa. Cn Cowa1 the
population is roughl% about 3 million peopleH there5ore1 the e8pansion in that state will onl%
co$er 1-+1+++ residents. The 5inal Eepublican state that was to accept the co$erage would be
New Ferse%. Cn New Ferse%1 the "o$ernor onl% allowed about 1+*1+++ o5 his state=s residents to
recei$e the co$erage. New Ferse%=s population is close to about A million people. That co$erage
does not e$en co$er hal5 o5 the residents in the state. These 5our Eepublican states roughl%
co$ered their residents under ObamaCareH there5ore1 this would simpl% cause residents to get 5ed
up and most li!el% protest against the co$erage plan.
The go$ernment=s action in closing the donut hole will result in both positi$e and
negati$e outcomes. The closing o5 the donut hole is bene5icial to seniors and people with
disabilities as their prescription drugs will be co$ered without gaps. #s a result1 this will sa$e
-
man% people mone% who are co$ered b% Medicare and increase the purchase o5 necessar%
prescription drugs. The negati$e outcomes consist o5 increasing certain ta8es upon the rich1
businesses1 and upper middle class. C5 the rich get ta8ed1 ObamaCare will not pro5it them because
the% will be pa%ing out o5 their own poc!ets in order to !eep the elderl% citi;ens ali$e and
health%. Cn this case1 the rich 5eel as though the% are obligated to support it1 e$en though the% are
not getting an%thing out o5 it. The upper class and business owners that are at the older age will
not e$en be eligible to recei$e the bene5its that are included in the Medicare portion since the%
can easil% a55ord their medications and doctors chec! ups. Cnstead1 the upper class will ha$e to
pa% 5or themsel$es and the elderl% that recei$e Medicare.
Expectation
We1 Pod 11 e8pect that the bene5its o5 closing the donut hole will outweigh the negati$e
conse>uences o5 the Medicare pro$isions under the #C#. O$erall1 the bene5its o5 the new
Medicare pro$isions are essentiall% positi$e 5or the healthcare s%stem and citi;ens. The new
pro$isions would essentiall% close the donut hole1 thus reducing the costs o5 healthcare1 ma!ing
it a$ailable to >uali5ied citi;ens1 and 5i8 the 5laws in the pre$ious Medicare insurance program.
This is e8tremel% bene5icial to an%one who is burdened with the high costs o5 healthcare
including low income as well as middle,income indi$iduals. #lso1 the new pro$isions would
ma!e healthcare a55ordable 5or disabled and terminall% ill citi;ens. Most importantl%1 the new
Medicare pro$isions will allow 5or the e8pansion o5 the medical industr%1 allowing 5or more
doctors1 medical supplies1 and hospital ser$ices. &ecause the pro$isions are intended to
encompass a large $ariet% o5 citi;ens1 there will be more customers and thus more re$enue into
the medical mar!et. This re$enue in turn will accommodate the e8pansion o5 medical ser$ices1
personnel1 and supplies.
4
The Medicare pro$isions are 5unded b% the #C#1 which obtains its re$enues through the
sharing o5 costs. '$er%one will be re>uired to ha$e insurance in which brings business 5or the
pri$ate insurances. 6nder the #C#1 e$er% person e8cluding high income indi$iduals will pa% an
appro8imatel% similar amount on health insurance1 while the rich portion o5 the population will
pa% more in terms o5 ta8 since the% ha$e the 5inancial resources to do so. Through the #C#1 all
members o5 the pro$ision will pa% simultaneousl%1 remo$ing the ris! o5 missing pa%ments1 and
increasing the speed o5 seeing a doctor. &ecause o5 the simultaneous pa%ments1 there will be less
people missing their scheduled appointments. #s described1 the 5inancial bac!ing o5 the #C# is
both 5inanciall% 5air and medicall% bene5icial.
Evidence
The creation o5 Medicare has made an easier access to medical treatments 5or the seniors.
This sa5et% net assistant program has 9dramaticall% trans5ormed access to health care 5or the
elderl% in the 6nited 2tates: ("reenberg and Page -BA. Jears be5ore the creation o5 Medicare1
man% people did not >uali5% 5or health care since the% were out o5 the mar!et in terms o5 not
satis5%ing the re>uirements. On the 3+th o5 Ful% in 1A4-1 President L%ndon &. Fohnson
success5ull% 9signed Medicare Kinsurance programL into law at the Harr% 2. Truman Librar%:
(9President L%ndon &. Fohnson 2igns Medicare &ill:. Medicare would not ha$e become an
o55icial 5ederal program without Harr% 2. Truman. Truman is considered to be the 95irst president
to publicl% endorse a national health insurance program Ka5ter the 2econd World War endedL:
(9President L%ndon &. Fohnson 2igns Medicare &ill:. Cn 1A*-1 he proposed a similar insurance
program (to the Medicare insurance program that helps the wor!ing class. His proposal was
>uic!l% reMected because the 9#merican Medical #ssociation (#M# labeled the president=s plan
Nsociali;ed medicine= ta!ing ad$antage o5 the public=s concern o$er communism in Eussia:
B
(9President L%ndon &. Fohnson 2igns Medicare &ill:. O$ertime1 it was ob$ious that the health
care costs were 9the leading cause o5 po$ert%.: ("reenberg and Page -BA. There5ore1 President
Fohnson was able to success5ull% sign the program into law in order to help >uali5ied people with
their health care costs. #s a result1 man% people are able to ha$e access to healthcare where the%
once ha$e not.
The Medicare program generall% contains three main components) Medicare Parts #1 &1
and D. #ccording to "reenberg and Page1 9'$er%one 4- and o$er is automaticall% enrolled in
Medicare Part #: (-BA. Medicare Part # help alle$iate the seniors= 5inancial stress o5 pa%ing 5or
medical treatment1 including hospital sta%s and short,term s!illed nursing a5ter hospitali;ation.
The Part # onl% pa%s a portion o5 the seniors= medical bill1 howe$er. This is where Part & o5 the
Medicare comes into pla%. Ct is optional to purchase the Part & o5 the Medicare insurance
co$erage to help pa% 5or doctor $isits1 medical e>uipment1 and tests. 0urthermore1 the purpose o5
Medicare Part D is to help pa% a portion o5 prescription drugs 5or seniors. Howe$er1 Part D does
not co$er all portions o5 the costs. Medicare Part #1 &1 and D all ha$e 5laws or gaps within the
program. There5ore1 it is possible to purchase the Medigap insurance1 which co$ers the missing
parts that are not co$ered.
The gap in the Medicare is o5ten re5erred to as the donut hole. The origins o5 the donut
hole came 5rom the Medicare Moderni;ation #ct o5 7++3 (MM#1 also !nown as the Medicare
Drug Prescription #ct or Part D in the Medicare insurance program1 which was implemented
during 5ormer 6.2. President "eorge W. &ush %ears. The purpose o5 the MM# was to modi5%
the prescription drug co$erage in order to 5inanciall% help seniors to obtain the prescribed drugs
that the% need to better their health. The donut hole in the Medicare be5ore ObamaCare is an
issue that man% seniors 5ace since it is a 9temporar% limit on what the drug plan will co$er 5or
(
drugs: (Medicare. The temporar% limits starts when >uali5iers reach the ?71(3+ limit where B-
percent o5 the costs o5 drugs are co$ered while the% will continue recei$e co$erage when the%
reach the ?41**+ limit point (9#55ordable Care #ct) Closing the Medicare Doughnut Hole:. Cn
between the ?71(3+ limit and ?41**+ limit points is the gap1 creating a donut hole1 where the
Medicare insurance program does not co$er appro8imatel% ?3141+ o5 the prescribed drugs. The
drugs that are not co$ered lea$es 5inancial stress on the seniors. Man% seniors are either
unemplo%ed or retired1 which ma!es it di55icult 5or them to pa% the costs o5 prescription drugs.
The donut hole is unnecessar% and causes problems with the seniors)
The Co$erage "ap or Donut Hole has caused a considerable amount o5 con5usion
5or man% people and has e$en surprised seniors when the% suddenl% are re>uired
to pa% the higher price (or be5ore 7+111 the 5ull price o5 their prescription
medications (OHow Does This Donut Hole Eeall% Wor!PO.
The con5usion o5 these people under Medicare will cause man% problems. One such problem
includes not being able to pa% o55 the costs on their prescription drugs. This issue will create and
put the seniors under a lot o5 5inancial hardship. With the donut hole1 the Medicare insurance
program is onl% helping seniors at a certain le$el until the ne8t le$el is reached. This in turn does
not 5ull% 5inanciall% support the seniors. #s a result1 man% seniors ma% stop going to doctors and
ta!ing their medications since the% are not able to a55ord it. The gap is the 5law in the Medicare
insurance program plan until President Obama presented the #55ordable Care #ct (#C#1 which
is commonl% !nown as ObamaCare.
President &arac! Obama saw the issue o5 the Medicare gap co$erage. Coming 5rom a
wor!ing class bac!ground1 he insists in helping those people who are in the wor!ing class.
President Obama signed the #55ordable Care #ct (#C# into law with the hopes o5 remo$ing the
A
5law b% closing the donut hole. Currentl%1 the donut hole graduall% stopped growing and 9has
helped reduce out,o5,poc!et drug spending 5or enrollees: (G00. The closing o5 the donut hole
will result in a55ordable prescription drugs1 which encourages seniors to continue to care 5or their
health without the signi5icant 5inancial burden. The donut hole will not be 5ull% closed until the
%ear o5 7+7+1 in which will 9bring additional relie5 to millions o5 enrollees: (G00. Cn the
meantime1 ObamaCare allows 5or senior citi;ens who are in the donut hole to recei$e discounts
o55 their drugs. 2eniors can now get discounts o5 5i5t% percent on brand names and B,1* percent
on generic drugs (9#55ordable Care #ct) Closing the Medicare Doughnut Hole:. The temporar%
discounts help relie$e the cost burden on a great amount o5 seniors who ha$e trouble pa%ing 5or
their medications. Ct also will encourage the seniors1 who ma% ha$e stopped ta!ing their
necessar% prescription drugs due to the costs1 to continue their steps in getting the $ital care that
the% need. The implementation o5 ObamaCare has alread% bene5ited the senior citi;ens who
>uali5% 5or Medicare. Cn 5act1 ObamaCare has helped 7.4- million seniors sa$e o$er 1.- billion
dollars on drugs alone (9#55ordable Care #ct) Closing the Medicare Doughnut Hole:. The
amount o5 seniors bene5iting 5rom the ObamaCare is graduall% increasing1 while the donut hole
is graduall% closing.
The Medicare e8pansion under the #C# aims to do more than Must close the donut hole.
#nother maMor impro$ement in Medicare is new bundled pa%ments. The old 5orm o5 pa%ment 5or
Medicare was a 5ee,5or,ser$ice e8pense and under ObamaCare it will change to a 9bundled
pa%ment: 5or set medical ser$ices. The 5ee,5or,ser$ice pa%ment generall% re>uired a 5ee 5or each
doctor $isit1 test1 or procedure1 and Medicare patients were billed upon completion o5 ser$ice.
This t%pe o5 ser$ice established an incenti$e 5or health care pro$iders to o55er more >uantitati$e
ser$ices rather than >ualitati$e ser$ices 5or senior citi;ens. Cn theor%1 a doctor ma% ha$e a
1+
Medicare patient $isit his o55ice se$eral times when a single $isit could ha$e su55iced. The doctor
o5 course would be a little wealthier and the patient with less mone% and lost time. This
>uantitati$e ser$ice also ties up time health care pro$iders could be spending with other patients
and energ% that could impro$e the >ualit% o5 health care o$erall.
6nder ObamaCare1 Medicare will change to a bundled pa%ment in which a patient will
pa% a lump sum 5or a speci5ic procedure or an episode o5 care. #n e8ample includes a Medicare
patient who needs a hip replacement surger%. Cnstead o5 pa%ing 5ees 5or si8 doctor=s $isits1 the
surger%1 etc. indi$iduall%H the patient would pa% an o$erall1 one,time 5ee 5or a 5oreseeable hip
replacement procedure. The maMor ad$antage is a reduction in the o$erall cost o5 health care on
both the patient and the 0ederal "o$ernment. # one,time bundled pa%ment would li!el% cut
e8tra e8penses charged 5or unnecessar% treatments or $isits. Ct is hope5ul that this pa%ment
would pro$ide incenti$e 5or health care pro$iders to gi$e help5ul ser$ice in more e55icient time
inter$als with less e8penses. The Medicare sa$ings would li!el% go towards impro$ing the
national de5icit or 5ed bac! into the impro$ement o5 6.2. Health Care. The second maMor
ad$antage is the potential that bundled pa%ments could impro$e the >ualit% o5 health insurance
b% increasing a stronger demand on health care pro$iders to per5orm their tas!s accuratel% and
e55icientl%. Doctors would li!el% want to pro$ide help5ul medical ser$ice 5aster with less error in
order to mo$e on to the ne8t patient and the ne8t dollar.
Ct is nearl% impossible to tal! about the potential ad$antages o5 the new Medicare without
at least mentioning the indi$idual mandate. The mandate is 5undamental to the entire #55ordable
Care #ct. Cn 5act1 in 2tate o5 0lorida et al $s. 6.2. Health 2er$ices1 the District Court ruled 9. . .
The mandate could not be se$ered 5rom an% other pro$ision Kin the #55ordable Care #ctL: (O%e;1
The #55ordable Care #ct Cases. The indi$idual mandate is ObamaCare=s re>uirement that
11
e$er% indi$idual or 5amil% either purchase insurance or pa% a 9penalt%.: The indi$idual mandate
is not onl% necessar% and proper 5or the Medicare bene5its so 5ar e8plained1 but also a bene5it per
se.
0irst1 the indi$idual mandate is the maMor cost,sharing resource,helping bac! the new
Medicare=s attempt at closing the donut hole. The indi$idual mandate combined with the new
ta8es le$ied on indi$iduals with a 7-+Q thousand annual income ma!es up a $ast maMorit% o5 the
ObamaCare 5unding. Without the indi$idual mandate there could not be ObamaCare and in turn
no Medicare impro$ement. The notion o5 ObamaCare as a uni$ersal health care has signi5icant
meaning when compared to the pre$ious health care s%stems. #s a uni$ersal health care s%stem1
ObamaCare aims to insure e$er%one regardless o5 poor health and pre$ious medical conditions.
#s concerned here1 ObamaCare loo!s to co$er more and more o5 the prescription drug costs 5or
senior citi;ens that 5all in the co$erage gap. Ct also loo!s to e8pand Medicaid. These ad$antages
simpl% are not possible under our pre$ious health care s%stem. 6nder our pre$ious s%stem1
insurance companies were allowed to discriminate against those with serious medical conditions.
# chain o5 disaster would result i5 laws were established to pre$ent such discrimination under the
old s%stem. Cn co$ering terminall% ill patients1 insurance companies would spend signi5icantl%
more o$erall on their client=s health care. These e8penses would in turn be passed on to
customers in the 5orm o5 much higher insurance premiums. The increase in insurance premiums
would cause %ounger1 healthier1 or poorer citi;ens to 5orgo ha$ing insurance altogether1 either
because the% could not a55ord it or because the cost would e8ceed the bene5it. Medicare would
li!el% be dismantled entirel%. Cne$itabl% the price o5 ha$ing health insurance would be so great
that onl% those with terminal illnesses would consider co$erage. This is what is called the death
spiral and was a maMor issue pre$enting uni$ersal health care under the pre$ious health care
17
s%stem.
The indi$idual mandate sol$es the problem o5 a death spiral and pro$ides 5unding 5or
Medicare impro$ement. The idea is i5 e$er% 6.2. citi;en o$er the age o5 74 were re>uired to ha$e
insurance1 there would be a substantiall% larger bod% o5 customers to spread the costs o5 health
care impro$ements li!e Medicare1 uni$ersal co$erage1 and Medicaid. With more people insured1
there is more mone% to go around to assist in the re$ised Medicare. The mandate itsel5 is a
bene5it because now1 more people ha$e health insurance. The more people that are insured
means more people bene5iting 5rom health care. Ct would appear that i5 e$er%one in the 6.2. is
bene5iting 5rom health care then our countr% will become a place with healthier people. Health%
people ma!e happier people. Ct also seems logical to suggest that the greater health co$erage in
#merica would enhance the o$erall li5e e8pectanc% within the countr%. The re$ised Medicare1
itsel51 ought to enhance li5e e8pectanc% b% o55ering a greater number o5 senior citi;ens more
5ruit5ul %ears with prescription drugs paid 5or b% the indi$idual mandate.
The #C# implements man% re5orms that help to cut the costs o5 insurance while ma!ing
sure that more people1 who pre$iousl% were not able to be co$ered due to income ine>ualit% and
pre,e8isting conditions1 are allowed access to low cost a55ordable insurance through go$ernment
subsidies. The implementations o5 the new Medicare plan aimed to 5i8 these problems that
e8isted in pre$ious Medicare plan1 such as the donut hole. One o5 the maMor cost sa$ing measures
that is introduced in the #C# law is the one o5 the (+/7+ rule. Cn this rule1 health insurance
companies now ha$e to spend (+ cents o5 e$er% dollar the% recei$e towards the patients= care
and/or towards impro$ing e8isting care. With its implementation1 citi;ens in e$er% state will be
getting some o5 their mone% that did not go towards their care and bac! 5rom their insurance
compan%. '8amples o5 this are the estimations that Cali5ornians alone will recei$e ?4-14-A1A+-
13
in re5unds 5rom insurance companies1 which a$erages about ?B1 per Cali5ornian (including
5amil% and that Michiganders will recei$e ?1(14+A1(+(1 being about ?13( per 5amil%
(HH2.go$/HealthCare. This new measure will help insure that the consumer is getting the most
5or their mone% 5rom pri$ate insurance1 while still allowing the insurance compan% to pro5it. To
also protect against the insurance companies to raising prices with the introduction o5 the new
(+/7+ rule1 the law 5orces theses insurers ha$e to publicl% Musti5% their reasons 5or raisings
premiums abo$e 1+ percent (HH2.go$/HealthCare. This part o5 the law creates transparenc% 5or
the consumer and helps pre$ent health insurance raisings prices to get around the (+/7+ rule and
gain more pro5its.
'55icienc% in health care greatl% increases under the #C#. The law sets up state
e8changes 5or people o5 their respecti$e to sign up and get health insurance through1 which will
be managed b% each state. &% letting the states run their own it e8changes it allows 5or more
local management o5 the e8changes and helps deal with the issue o5 pri$ate insurance companies
onl% e8isting in certain states. Cn Washington D.C. and 14 other states will run the e8changes on
their own1 while the rest will ha$e aid 5rom the 5ederal go$ernment in running their e8changes
(washingtonpost.com. Through these e8changes1 the pre$iousl% uninsured can now sign up $ia
the internet1 mail1 phone and in person to get health insurance1 allowing people who had pre
e8isting conditions and those who cannot a55ord premiums go$ernment assistance to ma!e them
a55ordable (HealthCare.go$. #ll the insurance policies that are o55ered through the program
must also include a basic le$el o5 co$erage1 co$ering such things as emergenc% room1 hospital
$isits and plans that will co$er women=s medical needs (Washingtonpost.com. #s seen1 the
Medicare pro$isions under the ObamaCare bene5its both sectors in societ%. Ct helps the seniors
sa$e mone% and ma!e prescription drugs a55ordable1 while increasing the business 5or the pri$ate
1*
insurances.
0or some e8perts1 Obamacare ma% seem unconstitutional because the% belie$e that
rein5orcing e$er%one in the 6nited 2tates to bu% and ha$e health insurance is not Musti5iable.
Despite the claim1 ObamaCare is1 in 5act1 constitutional. On the 74th o5 March 7+171 9the
2upreme Court handed down its decision in National 0ederation o5 Cndependent &usiness $.
2ebelius1 ruling that the indi$idual mandate pro$ision o5 ObamaCare was constitutional: (Wing.
The reason ObamaCare was 5ound constitutional is that it is characteri;ed as a ta8 and not a strict
penalt% 5or not bu%ing medical insurance. 6nder the Constitution1 Congress is gi$en the power o5
ta8ation. &ecause ObamaCare is labeled as a ta81 it is entirel% constitutional. Chie5 Fustice Fohn
Eoberts has a55irmed the constitutionalit% o5 ObamaCare)
The #55ordable Care #ct<s re>uirement that certain indi$iduals pa% a 5inancial
penalt% 5or not obtaining health insurance ma% be reasonabl% characteri;ed as a
ta8. &ecause the constitution permits such a ta81 it is not our role to 5orbid it1 or to
pass upon its wisdom or 5airness. (Cohn
Due to its characteri;ation as a ta81 the 2upreme Court under Congress= power o5 ta8ation upheld
ObamaCare. This power o5 ta8ation 5or Congress is authori;ed and demonstrated b% the Ta8ing
and 2pending Clause in the Constitution as 5ollows)
2ection (. Clause 1. The Congress shall ha$e Power to la% and collect
Ta8es1 Duties1 Cmposts and '8cises1 to pa% the Debts and pro$ide 5or
the common De5ense and general Wel5are o5 the 6nited 2tatesH but all Duties1
Cmposts and '8cises shall be uni5orm throughout the 6nited 2tates. (The
Constitution
The ta8 should not be $iewed as a 5orm o5 punishment1 but it ma% appear that wa%. With the
1-
Constitution supporting the claim that ObamaCare is ta8ing the citi;ens 5or not ha$ing insurance
co$erage1 it ma!es ObamaCare constitutional.
Cn addition1 ObamaCare is constitutional because it helps e$er% 6.2. citi;en1 not onl% the
sic! or the poor. #ccording to the New Jor! Times1 9The Obama administration had argued that
the mandate was necessar% because it allowed other pro$isions o5 the law to 5unction) those
o$erhauling the wa% insurance is sold and those pre$enting sic! people 5rom being denied or
charged e8tra 5or insurance.: The reason 5or the implementation o5 the ObamaCare is to gi$e
health care co$erage to all 6.2. citi;ens1 including the ones who are unable to a55ord it. The more
people who are signed up 5or co$erage1 the more a55ordable the insurance premiums are) 9The
e8pansion had been designed to pro$ide co$erage to 1B million #mericans: (Lipta!. The
ObamaCare is designed to help 6.2. citi;ens and not hurt them in an% wa%H there5ore1 it is
constitutional 5or the ObamaCare to be implemented in the 6.2. sa5et% net s%stem.
Contrary Evidence
The a55ordable #ct Care (#C# is seen to ad$ersel% a55ect people who ha$e high incomes
and own success5ul businesses. These people who are considered 9wealth%: or 9rich: are said to
be ma!ing more than ?7++1+++ 5or indi$iduals or ?7-+1+++ 5or couples who 5iles their income
ta8es as Moint (0orbes. The amount is based on the adMusted gross income on their income ta8.
Howe$er1 some middle,class wor!ing 5amilies who ha$e 9high,>ualit% plans: will also be
a55ected b% the Medicare e8pansion. 0or these people1 who are ma!ing o$er the amount stated1
will be pa%ing a 3.( percent ta8 increase on their in$estment income. Howe$er1 insurance plans
5or the middle,class will graduall% increase as the Cadillac Ta8 5ull% ta!es action in 7+1( in
order to help 5und the #C#.
The Cadillac Ta8 can be re5erred as 9Cadillac: or 9gold,plated.: This e8cise ta8 penali;es
14
companies1 including health insurers1 5or gi$ing their emplo%ees health,care plans that are 9too
generous: (MotherFones. This is another wa% to 5und 5or the #C#1 but it will create an unhapp%
atmosphere with the companies. The insurance pro$iders will be hea$il% ta8ed *+ percent out o5
their total amount i5 the% continue to o55er their people insurance that cost more than ?1+17++ 5or
indi$iduals or ?7B1-++ 5or 5amil% o5 insurance (P5annenstiel. #s a result1 companies are 5orced
to re$ise their plans that include cutting health bene5its and increasing price in order to a$oid the
Cadillac Ta8. This can be obser$ed in the increased co,pa% 5or indi$iduals.
The idea o5 9cost sharing: is a method that is use to 5und 5or the #C#. "enerall%1 the
idea o5 cost sharing will cause the increase in prices o5 health insurance and more ta8es on the
%oung people. Joung people will be greatl% a55ected since the% are the ones who are wor!ing in
the societ% and pa%ing 5or go$ernment assistance programs through ta8es. Most o5 the seniors
will be retiring soon1 which the% would not contribute to the new Medicare e8pansion. These
older people will bene5it more 5rom the #C# since the% are able to ta!e ad$antage o5 it now due
to their need% in health care. Cn truth1 most %oung people do not wish to pa% more to support the
#C# 5inanciall% since the% do need health care currentl%. #s a result1 the Medicare e8pansion
will be putting more burden on the %outh1 wealth%1 rich1 and business owners.
The donut hole was put into e8istence as a wa% to balance the cost o5 Medicare. 2ince the
e8pansion o5 the Medicare program was to include prescription drugs without cutting other parts
o5 Medicare or increasing ta8 re$enue1 the e8pansion would add ?14 trillion dollars to the
Medicare program. (Jou need to cite %our source here. The donut hole was designed to o55set
this because it would ha$e the consumer share part o5 the new ?14 trillion burden.
The price sharing thresholds were determined b% to ma!e seniors more price conscience
about the cost o5 their prescription drugs. Ct encourages the elderl% to stic! to the more a55ordable
1B
generic drugs that account 5or (+ percent o5 all prescriptions. The donut hole has managed to
lower congress= proMection o5 the cost b% 3+ percent. Meaning the restrictions that the old
Medicare insurance program put on prescription drugs !ept prices low on the drugs. 'liminating
the donut hole could drasticall% raise the price o5 drugs because it would no longer encourage
seniors to choose the less e8pensi$e drugs on the mar!et. The seniors would no longer ha$e to
consider the budgetar% means1 thus increasing the amount that the ta8pa%er will ha$e to pa% to
co$er the rise in the costs.
The drug companies will actuall% stand to gain 5rom this new measure. "oldman 2achs
estimates drug companies stood to gain up to ?7+ billion dollars between 7+1+,7+1A due the
drug spending increases b% seniors. These bene5its 5or the drug companies will onl% increase the
burden on the 6.2. econom% and the ta8pa%ers who will ha$e to co$er the increase costs o5 the
elderlies increase and rec!less spending.
The ObamaCare might ha$e great impacts on each indi$idual1 but it also contains some
negati$e a55ects that people are not aware. To start o551 i5 the ObamaCare comes into pla%1 it will
brea! the s%stem o5 healthcare. 0or instance1 doctors and hospitals will be a55ected the most since
indi$iduals that get ObamaCare are allowed a three,month 9grace period.: The grace period
means that indi$iduals who sign up 5or ObamaCare are allowed to use it in those three months
without pa%ing 5or it i5 the% cannot a55ord it. Howe$er1 in order to recei$e the three,month grace
period1 the indi$iduals would ha$e to pa% 5or the 5irst month. #s a result1 the seniors will get the
ne8t two months 5or 5ree. That leads to indi$iduals to use all the bene5its gi$en in ObamaCare
and cancel their insurance once those three months are o$er. There5ore1 the doctors and hospitals
will go into ban!ruptc% because indi$iduals will be using their supplies and getting medication
5or no cost. This will lead to ha$ing to pa% doctors and hospitals less than the amount that the%
1(
are currentl% accumulating. Ha$ing seniors recei$ing doctors= and/or hospitals= assistance and
medication 5or 5ree and not ha$ing to pa% 5or it in the end will result a big issue in the 5uture.
Tori Eichards1 a writer o5 the article 9Obama Lea$es Doctors On the Hoo! 5or Deadbeats1:
states1 9The insurance compan% must pa% the claims during the 5irst month o5 the grace,periodH
during the second and third month doctors and hospitals are le5t to collect unpaid bills.: This is
where e$er%thing goes downhill 5or the doctors and the hospitals. This literall% Must introduces
and legali;es a wa% o5 5raud that can be done towards healthcare pro$iders and towards the
insurance companies. This puts all the pressure and burdens on the insurance companies when
indi$iduals do not pa% 5or their premium care. This results to doctors and hospitals to lose the
mone% that the% did not ha$e in the 5irst place since the% were sa$ing up 5or the new law1 the
ObamaCare.
Howe$er1 not onl% does the ObamaCare ma!es a negati$e impact on doctors and the
hospitals1 but it also a55ects each person=s 5ederal ta8 returns. Cn 9How ObamaCare Will #55ect
Jour 0ederal Ta8 Eeturn1: b% Teresa Mcusic. Mcusic states1 9The two biggest changes1
according to &ender1 are the penalt% 5or not bu%ing insurance ne8t %ear and in %ears to come1 and
the additional ta81 called a Medicare surta81 starting this %ear on wealthier households.: Those
are the two biggest changes in the health care societ% because the penalt% ruins an indi$idual=s
ta8 5low s%stem b% charging them more than what the actual ObamaCare costs (or possibl% close
enough to the same price. The second would be how the% will get ta8ed additionall%1 calling it
the Medicare surta8. Meaning that indi$iduals would get ta8ed +.A percent on their ta8es on their
%earl% basis.
#ll in all1 these as stated pre$iousl% are the main e55ects that ObamaCare impacts on indi$iduals
regarding the healthcare 5ield.
1A
The 5uture o5 ObamaCare and the 5ederal go$ernment<s control o$er Medicare is still 5ar
5rom a certaint%. Nothing pro$es this more than the constitutionalit% issues argued in the
2upreme Court case National 0ederation o5 Cndependent &usiness $. 2ebelius. The 2upreme
Court=s holding on ObamaCare has been the single greatest blow to the authorit% o5 ObamaCare.
Cnitiall%1 0lorida and other states sued the 6.2. Health Department o$er the constitutionalit% o5
the indi$idual mandate and Medicaid e8pansion under the #C#. 0lorida et al argued that
Congress has no power in$ested b% the Constitution to penali;e citi;ens 5or re5using to purchase
health insurance and Congress cannot withhold all pre$ious Medicaid 5unds i5 a 2tate re5used to
accept the new Medicaid e8pansion outlined in the #C#. With the issue o5 the indi$idual
mandate1 both the District Court and the Court o5 #ppeals ruled the mandate was
unconstitutional and thereb% the entire #C# was unconstitutional. The 2upreme Court too! the
case and two 5undamental arguments were presented b% the 6.2. Health Department in 5a$or o5
upholding the mandate)
1. Congress could en5orce the indi$idual mandate under the Cnternational Commerce
Clause.
7. Congress could en5orce the indi$idual mandate1 not as a 9penalt%: but as a ta8
under Congress= ta8 authorit% (The #55ordable Care #ct Cases (T#C#C.
The 5irst argument relies on the Cnternational Commerce Clause to pro$ide the power
necessar% 5or congress to en5orce the indi$idual mandate penalt%. #ccording to Chie5 Fustice
Eoberts1 the author o5 the maMorit% opinion1 9Congress has broad authorit% under the Clause:
including not Must commerce between states1 9but e8tends to acti$ities that ha$e a substantial
e55ect on interstate commerce: (T#C#C. Health insurance at large meets this standard since it
is a massi$e 5orm o5 commerce state,to,state1 throughout the nation. Jet1 Eoberts holds that the
7+
Clause does not empower Congress to 9compel indi$iduals not engaged in commerce to
purchase an unwanted product: (T#C#C. On its 5ace this argument ma!es sense. C5 a certain
indi$idual decides against purchasing health insurance1 then no commerce e8ists. Eobert argues
Congress does not ha$e power under the Commerce Clause to regulate commerce that is not
alread% happening) 9The power to regulate commerce presupposes the e8istence o5 commerce
acti$it% to be regulated: (T#C#C. 0or this reason1 Eoberts rules the Cnternational Commerce
Clause cannot in$est Congress the power needed to support the indi$idual mandate. He then
rules in 5a$or o5 the second argument and upholds the $alidit% o5 Congress to penali;e
indi$iduals as a ta8 under Congress= Ta8 #uthorit%. #lthough ObamaCare Must does s>uea! b%
on grounds o5 the ta8 authorit%1 that 9broad authorit% under the Clause: is reduced to a ta8
authorit%.
Fustice "insburg1 in a dissenting opinion1 holds that the broad authorit% under the
Commerce Clause is unMustl% shot down1 limiting Congress= Medicare control. Her argument
ma!es a more compelling statement about the connection o5 uninsured 95ree riders: and their
participation in the national commerce o5 health insurance. "insburg ad$ances the argument that
uninsured indi$iduals cannot b% law be turned awa% 5rom medical care1 and hospitals are stuc!
with a large portion o5 the e8penses1 which the% place on insurance companies1 who raise
insurance premiums to co$er the e8pense. #ccording to studies presented in the court hearings1
9Cn 7++(1 health care ph%sicians recei$ed no compensation 5or ?*3 billion worth o5 the ?114
billion in care the% administered to those without insurance KandL . . . the cost,shi5ting Must
described increases 5amil% premiums b% on a$erage ?11+++ a %ear: (T#C#C. Those uninsured
a55ect the entire health care s%stem b% their re5usal to participate in health insurance and their
inabilit% to co$er the ser$ices the% utili;ed while uninsured. 2tudies 5urther show that 9more
71
than 4+@ o5 those without insurance $isit a hospital or doctor=s o55ice each %ear. Nearl% A+@
will within 5i$e %ears: (T#C#C. This is $er% con$incing e$idence that uninsured indi$iduals
participate in the health care commerce and 5ree riding $astl% a55ects the interstate commerce o5
healthcare. This ruling hurts the 5uture 5or Medicare and other health care initiati$es within the
#C# because Congress has been stripped o5 its broad power to en5orce or protect the #C#.
Now1 instead o5 general go$ernance o$er the #C#1 Congress ma% onl% en5orce a ta8 li!e
penalt%. Cnstead o5 ha$ing the authorit% to enact what is 9necessar% and proper1: Congress has
5urther limitations o$er the #C# i5 e$er problems become e$ident.
Conclusion
The new Medicare pro$ision under the #C# is a delight5ul impro$ement to #merica=s
health care because it aims to close up the begrudged donut hole1 streamline the e55icienc% o5 the
pre$ious Medicare pa%ment s%stem1 incenti$i;e better >ualit% care1 and increase the amount o5
citi;ens with health care1 thereb% increasing the o$erall li5e e8pectanc%. #lthough the pre$ious
Medicare insurance program ma% seem logical in terms o5 pa%ment methods and 5unding1 the
new Medicare insurance program e8pansion under the ObamaCare creates a better and a more
bene5icial co$erage 5or its >uali5iers. The new program co$ers more people than it used to as
well as bringing more people into using pri$ate insurances. The richest percentage o5 #mericans
stands to see the least gains 5rom the new Medicare while gi$ing the most. Those disabled and
o$er 4- stand to gain the most1 and e$entuall%1 i5 we are luc!%1 the maMorit% o5 us will one da%
5all into this categor%. This is wh% the new Medicare pro$ision is a smart in$estment. The
in$estment is also a great moral initiati$e to care 5or elders whom most are unable to care 5or
themsel$es. Those that are %oung and able1 students li!e the ones writing this essa%1 stand to
gi$e more awa% in the short run since some will be re>uired to pa% 5or health insurance in order
77
to budget the new Medicare incenti$es. Man% o5 these %oung and able ma% 5ail to utili;e e$en a
portion o5 the cost o5 their insurance rates through their good health and 5ortune. #nd e$en still1
the pa%ments are right and 5air. Man% %oung adults will bene5it i5 e$er an emergenc% does occur
because the% are insured. The% also contribute with their pa%ments to the new Medicare that will
e$entuall% 5ull% co$er prescription drug costs 5or >uali5%ing senior citi;ens. The problems o5 an
un5oreseeable 5uture in Medicare=s standing with issues o5 constitutionalit% and 5unding aside1
ObamaCare seems to be here to sta%. What is the problem with a uni$ersal health care s%stem
that budgets a new Medicare program aiming to co$er senior citi;en prescription drug costsP We
don=t see it.
Works Cited
Affordable Care Act: Closing the Medicare Doughnut Hole.
73
Prod.&arac!Obamadotcom.YouTube.
JouTube1 7+ Dec. 7+11. Web. 13 Dec. 7+13.
&rinc!erho551 Fenni5er1 and 'ric #. Coleman. OWhat Jou Need to Gnow #bout the Medicare
Prescription Drug #ct.O What You Need To Know About the Prescription Drug Act.
#merican #cadem% o5 0amil% Ph%sicians1 Mar. 7++-. Web. 13 Dec. 7+13.
Cohn1 Fonathan. ONew Eepublic) #55ordable Care #ct Cs Constitutional.O NP. NPE1 7( Fune
7+17. Web. 13 Dec. 7+13.
OHow Does This Donut Hole Eeall% Wor!PO How Does This Donut Hole eall! Wor"#R1"roup
LLC1 73 Oct. 7+13. Web. 13 Dec. 7+13.
OHow the Health Care Law Cs Ma!ing a Di55erence 5or the People o5 Cali5ornia.O $nited %tates
Depart&ent of Health and Hu&an %er'ices. 6.2. Department o5 Health S Human
2er$ices1 1 #ug. 7+13. Web. 17 Dec. 7+13.
Gapur1 2ahil. OThe 0our "OP 2tates That Ha$e O55iciall% #dopted Obamacare.O Tal"ing Points
Me&o. TPM Media LLC.1 71 #ug. 7+13. Web. 13 Dec. 7+13.
Lipta!1 #dam. O2upreme Court 6pholds Health Care Law1 -,*1 in Tictor% 5or Obama.OThe New
Yor" Ti&es. The New Jor! Times1 7( Fune 7+17. Web. 17 Dec. 7+13.
OObamaCare Medicare) Obamacare and Medicare.O (ba&aCare )acts: Dispelling the M!ths.
ObamaCare 0acts1 n.d. Web. 1+ Dec. 7+13.
OPresident L%ndon &. Fohnson 2igns Medicare &ill.O Tru&an *ibrar! + ,ul! -./ 0123:
President *!ndon 45 ,ohnson %igns Medicare 4ill. The Harr% 2. Truman Librar% and
Museum1 n.d. Web. 17 Dec. 7+13.
Eo%1 #$i!. OWh% Closing Medicare<s <Donut Hole< Cs a Terrible Cdea.O )orbes. 0orbes Maga;ine1
73 Ma% 7+17. Web. 13 Dec. 7+13.
7*
2a5ire1 William. ODoughnut Hole.O The New Yor" Ti&es. The New Jor! Times1 7- 0eb. 7++B.
Web. 13 Dec. 7+13.
2un1 Lena H. OHealth S 2cience.O Health and %cience. The Washington Post1 7- 2ept. 7+13.
Web. 13 Dec. 7+13.
TH6 A))(DA4*6 CA6 ACT CA%6%. The O%e; ProMect at CCT Chicago,Gent College o5 Law.
17 December 7+13. Uhttp:77www5o!e85org7cases79.0.+9.0179.0079.00:00:;..V.
The Constitution. OCE2 #nnotated Constitution.O C%7*<< Annotated Constitution Article <.
Cornell 6ni$ersit% Law 2chool1 n.d. Web. 1+ Dec. 7+13.
OThe Doughnut Hole.O Medicare <nteracti'e. Medicare Eights Center1 n.d. Web. 17 Dec. 7+13.
OThe Medicare Prescription Drug &ene5it 0act 2heet W X The Henr% F. Gaiser 0amil%
0oundation.O The Medicare Prescription Drug 4enefit )act %heet. Gaiser 0amil%
0oundation1 1A No$. 7+13. Web. 13 Dec. 7+13.
OWhat Cs the Health Cnsurance Mar!etplacePO HealthCare5go'. 6.2. Centers 5or Medicare S
Medicaid 2er$ices1 n.d. Web. 1+ Dec. 7+13.
Wing1 Nic!. O# Jear #5ter 2upreme Court Euling1 Obamacare Cs 2till Constitutional1 Nation
2till Hasn<t Cmploded.O The Huffington Post. TheHu55ingtonPost.com1 7( Fune 7+13.
Web.
11 Dec. 7+13.