In December 2003, President George W. Bush signed into law the Medicare Modernization Act (MMA), which added outpatient prescription drug benefits to Medicare. MMA is best known for the Part D, but this Act also redesigned and renamed the managed care program, formerly known as Medicare + Choice, to Medicare Advantage. The primary aim of the MMA was to increase beneficiaries’ access to private plans. The change was successful and Medicare enrollment in private plans increased from 5.3 million to 10 million in less than five years. The major elements: Pharmaceutical companies gained freedom from Medicare price controls, because after MMA drug benefit was provided with the private sector. Big companies received larger subsidies to participate …show more content…
For the first time in program history, a benefit is only available through private plans; beneficiaries can select prescription drug coverage offered as stand-alone private policies or as part of comprehensive health insurance coverage offered through HMOs and other private plans in Medicare Advantage. There is no Medicare drug plan directly offered by the federal government; drug coverage in Medicare has effectively been privatized (Teitelbaum & Wilensky P. 202). Medicare has always been a mix of public insurance and private delivery, and it has always maintained a prominent role for private insurers in administration. Yet what the MMA has done uniquely is to privatize insurance and cede a whole area of program benefits to risk-bearing private plans that operate instead of rather than alongside traditional Medicare. The MMA made two important changes in Medicare’s financing arrangements. The first change was to institute income-related premiums in Medicare. It means higher-income Medicare beneficiaries (those with incomes of more than $80,000) will pay more for their Part B premiums. The MMA’s other change in Medicare financing was to redefine standards for program solvency. Since its inception, Medicare has operated separate trust funds for Part A (federal hospital insurance) and Part B (federal supplementary medical