Medicare and Medicaid Recent Changes

The fears of the elderly were rooted in the fact that the reforms would eliminate “the tax deductibility of the 28% federal subsidy, known as the retiree drug subsidy (RDS), for employers who provide creditable prescription drug coverage to Medicare beneficiaries, effective in 2013” (KFF, 2010). Thus, the gutting feared by elderly Americans is the end of subsidies to private programs of elderly individuals with health coverage in addition to Medicare. The 2010 Healthcare Law also increases the Medicare payroll tax for individuals earning above $200,000 a year and establishes a new office within the Centers for Medicare & Medicaid Services (CMS) and the Federal Coordinated Health Care Office to “reduce annual market basket updates for inpatient hospital, home health, skilled nursing facility, hospice and other Medicare providers” (KFF, 2010).

Supporters of the 2010 Healthcare Reform Law point out the number of Americans with no health coverage at all. The end to Medicare subsidies for individuals who are already covered thus do not seem unreasonable and “a reduction in the rate of increase in payments to health care providers, to encourage more efficiency” will allow for expansion of Medicaid to the uninsured non-elderly poor (KFF 2010).

Furthermore, the proposed change will only affect 11 million of Medicares 46 million non-indigent beneficiaries. Finally, the fact that the reforms are attempting to “reduce Medicare spending if Medicare per capita growth rates exceed certain targets” will hopefully ensure the solvency of the program for many years in the future, and not just for this generation of elderly Americans (KFF, 2010).


FAQ. (2010). The New York Times. Retrieved November 17, 2010 at

Focus on health reform. (2010). Kaiser Family Forum (KFF). Retrieved November 17, 2010 at

Medicare and the Republicans. (2010, November 5) the New York Times. Retrieved November

17, 2010 at.

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