The Impact Of The Affordable Care Act On Medicare: Discussing The Changes And Implications Of Repeal

The Affordable Care Act (ACA), commonly known as “Obamacare,” has had a notable impact on Medicare, the federal health insurance program that caters to individuals aged 65 and above, certain younger people with disabilities and those with End Stage Renal Disease. Since its implementation in March 2010, the ACA has introduced several significant changes to Medicare. These changes include the establishment of Accountable Care Organizations (ACOs), the elimination of coverage gaps in prescription drugs (“donut hole”) and modifications to Medicare Advantage Plans. The primary objectives of these reforms were to enhance healthcare quality, expand access to benefits and reduce costs. This article aims to explore the specific alterations brought about by the ACA within Medicare and examine the potential consequences if the ACA were repealed in terms of spending on Medicare and its beneficiaries.

Accountable Care Organizations (ACOs)

Accountable Care Organizations (ACOs) emerged as one of the most notable modifications introduced by the ACA within Medicare. ACOs are collaborative groups comprising doctors, hospitals and other healthcare providers who voluntarily join forces to deliver coordinated, high-quality care to individuals enrolled in Medicare. The underlying goal behind ACOs is twofold; improving care quality while simultaneously reducing costs by eliminating unnecessary duplication of services and averting medical errors. ACOs are motivated to meet quality and savings targets because they get to share in the savings achieved for the Medicare program.

The Medicare Shared Savings Program (MSSP) was established by the Centers for Medicare & Medicaid Services (CMS) under the ACA to encourage the formation of ACOs. Since its inception, the program has experienced substantial growth, with hundreds of ACOs participating in the MSSP and serving millions of Medicare beneficiaries as of 2021.

Impact on Medicare Advantage Plans

Additionally, under the ACA, there have been noteworthy alterations made to Medicare Advantage Plans – private insurance plans that offer Medicare benefits. Payments to these plans were reduced by the ACA since they had previously received higher rates than traditional Medicare. The introduction of a star rating system for Medicare Advantage Plans aims to incentivize high-quality care and improve transparency for beneficiaries. Plans with higher star ratings are eligible for bonus payments and can enrol beneficiaries throughout the year. Conversely, plans with lower star ratings face enrollment restrictions and financial penalties.

Despite initial concerns about reduced payments leading to decreased enrollment in Medicare Advantage Plans like the Blue Cross Blue Shield Medicare Advantage Plans 2024, quite unexpectedly, enrollment has actually increased.

Enrollment in Medicare Advantage Plans has been steadily increasing and currently, over one-third of all Medicare beneficiaries are enrolled in these plans. The rise in popularity can be attributed to the heightened competition among plans, improved benefits and lower premiums.

Closing of the “Donut Hole”

The ACA also brought about significant changes to the Medicare Part D prescription drug benefit by gradually eliminating the coverage gap commonly referred to as the “donut hole.” Before the ACA, beneficiaries enrolled in Medicare Part D were responsible for covering 100% of their prescription drug costs while in this coverage gap, which placed a heavy financial burden on many individuals, particularly those with chronic conditions.

Under the ACA, through a combination of discounts provided by drug manufacturers and increased government subsidies, this coverage gap was gradually closed. As of 2020, it has been effectively eliminated, with beneficiaries now only responsible for 25% of their prescription drug costs during this period. This modification has resulted in significant cost savings for Medicare beneficiaries and has contributed to enhancing affordability when it comes to prescription drugs.

Enhanced Preventive Services and Additional Benefits

One positive outcome of the Affordable Care Act’s impact on Medicare is the improvement in preventive services and the introduction of more benefits. Thanks to the ACA, Medicare beneficiaries now have access to a wider range of preventive services without having to pay out-of-pocket expenses. These services include annual wellness visits, screenings for cardiovascular disease, diabetes, and certain types of cancer, as well as immunizations, among others. The main objective of these services is to detect health issues at an early stage when they are easier and less expensive to treat.

These improvements in preventive care and additional benefits have not only contributed to better health outcomes for Medicare beneficiaries but have also played a role in reducing healthcare costs. By identifying health issues early on and effectively managing chronic conditions, beneficiaries are less likely to require costly hospitalizations and other high-priced forms of care. These modifications have played a significant role in ensuring the long-term viability of the Medicare program and guaranteeing that beneficiaries can continue to receive the necessary healthcare services.

The emphasis on preventive care and additional benefits within the ACA highlights the importance of taking a comprehensive approach to healthcare. By prioritizing prevention and early intervention, we can enhance health outcomes and lower costs for both beneficiaries and the Medicare program. These changes also underscore the significance of addressing social determinants of health, such as access to nutritious food, safe housing and transportation, which have a substantial impact on overall well-being.

Implications of Repealing the Affordable Care Act

The implications of repealing the Affordable Care Act (ACA) could have a notable impact on both Medicare spending and its beneficiaries. The ACA implemented various measures aimed at reducing Medicare expenditure, such as decreased payments to providers and Medicare Advantage Plans, along with efforts to combat waste, fraud and abuse. If the ACA were repealed, it could result in increased Medicare spending, leading to additional strain on the program’s finances and potentially causing higher costs for beneficiaries.

Furthermore, repealing the ACA could reverse the progress made in closing the prescription drug coverage gap (donut hole), ultimately increasing financial burdens for Medicare beneficiaries who rely on medications. Additionally, eliminating accountable care organizations (ACOs) and other value-based payment models may hinder initiatives aimed at enhancing care quality and reducing costs within the Medicare program.


In conclusion, the Affordable Care Act has had a significant impact on Medicare by implementing reforms that have enhanced care quality, expanded access to benefits and reduced expenses.

The implementation of Accountable Care Organizations, the resolution of the donut hole issue and modifications to Medicare Advantage Plans have all played a role in these advancements. However, if the ACA were to be repealed, it could potentially reverse much of this progress and have consequences for both Medicare spending and those who benefit from it. Given the uncertainty surrounding the future of the ACA, it remains crucial to continuously assess how this law affects the Medicare program and its recipients.