The new healthcare law affects Medicare Plans in a subsstantial way. The biggest impact is on Medicare Advantage Plans. The cuts will happen over a ten year period and will amount to $145 billion. These plans are targeted because they were thought to be over subsidized. These private plans now insure about 25% of all Medicare eligible beneficiaries.
Critics say these cuts will have a significant impact on many because their benefits will be cut substantially. The law brings down the amount paid to these plans per person from $114 per $100 spent per person to $107. The goal is to save money and put the private plans on a more even playing field with traditional Medicare.
The Obama administration is easing these cuts by providing $8 billion in subsidies for these private plans as an incentive to offer better coverage temporarily. This bonus plan is under scrutiny and may not survive the year. The GAO has recommended that it is too expensive.