How a Supreme Court Decision on the Affordable Care Act Could Affect Medicare

• by Christian Worstell
• February 22, 2021

Published November 9, 2020

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The Trump administration has long sought to strike down the Affordable Care Act (ACA, often called Obamacare), and is now pushing a case, known as California vs. Texas, to the Supreme Court on the grounds that part of the health care law is unconstitutional.

The case before the Supreme Court won’t directly decide the fate of the ACA. If the Affordable Care Act were repealed or rescinded, however, what would that mean for Medicare?

1. The Part D Donut Hole Could Return

The ACA gradually closed the coverage gap, or “donut hole,” faced by some Medicare Part D Prescription Drug plan beneficiaries.

Part of the law that closed the donut hole also forces drug manufacturers and insurance companies to shoulder a higher share of the cost for prescription drugs after beneficiaries reach a certain out-of-pocket spending limit on their covered drugs. 

The donut hole reached its final phase in 2020, where beneficiaries now pay just 25% of the cost of their generic and brand-name drugs after reaching their plan’s spending limit. Before the ACA helped close the donut hole, beneficiaries were responsible for a much higher share of their prescription drug costs when they entered this coverage gap.

2. Preventive Care Would No Longer Be Free

Because of provisions within the ACA, Medicare beneficiaries pay no deductibles or coinsurance for certain preventive screenings for conditions such as cancer, heart disease and diabetes. Annual Medicare wellness exams are free of charge, as are flu shots and certain other vaccines. 

Prior to the ACA, Medicare beneficiaries were typically responsible for 20% of the costs of these types of preventive services covered by Medicare, after meeting their annual Medicare Part B deductible.

3. Medicare Advantage Plans May Lose Some Value

Under the ACA, Medicare Advantage (Medicare Part C) plans are required to spend at least 85% of the revenue generated by plan premiums on other plan health care costs, and not toward company profits or overhead. 

The ACA also mandates that Medicare Advantage plans are not allowed to charge providers more than Original Medicare (Medicare Part A and Part B) for chemotherapy, skilled nursing care, dialysis and other specialized services. 

Repealing the ACA could mean loosening these requirements.

4. Medicare Insolvency Would Likely Come Sooner

The Medicare program has been facing insolvency for years, but one factor that has kept total insolvency at bay is the ACA. 

One study performed by the Center for Medicare Advocacy and cited in a Supreme Court amicus brief found that the ACA delayed the Medicare insolvency date by eight years, to 2026. Without the ACA’s backing, Medicare could face near immediate insolvency. 

5. Premiums and Deductibles Would Rise Faster

The ACA helps curb provider payments and thus keeps Medicare premiums, deductibles and copayments in check. 

In the nine years prior to the ACA becoming law — 2000 to 2009 — Medicare Part B premiums increased 112%. In the nice years since — 2011 to 2020 — Part B premiums have gone up just 23%. 

The administration’s case is set to appear before the Supreme Court on November 10, and a decision could be expected by the spring. 

About the author

Christian Worstell is a licensed insurance agent and a Senior Staff Writer for MedicareAdvantage.com. He is passionate about helping people navigate the complexities of Medicare and understand their coverage options.

His work has been featured in outlets such as Vox, MSN, and The Washington Post, and he is a frequent contributor to health care and finance blogs.

Christian is a graduate of Shippensburg University with a bachelor’s degree in journalism. He currently lives in Raleigh, NC.

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