by Mark Hamelburg
August 11, 2017
The recent article, “Medicare Advantage Spends Less on Care, So Why Is It Costing So Much?”, badly misses the mark on Medicare Advantage (MA).
Medicare Advantage works. It’s working for more than 18 million beneficiaries to deliver real value, affordable care, better services, and better health – which the article acknowledges. According to several recent studies, MA beneficiaries achieve better health outcomes, have lower readmission rates, and have higher rates of preventative care visits when compared with traditional Medicare. And, the program delivers results for hardworking taxpayers.
Those are facts about the program today. Unfortunately, the article’s statement – that Medicare pays more for MA than for traditional Medicare – is wrong, because it is based on data from 2010, before the Affordable Care Act (ACA) changed MA. The ACA made significant changes to the MA program. It reduced payments, so that today the average payment to MA plans is equivalent to costs for traditional Medicare, according to the Medicare Payment Advisory Commission. Further, the ACA requires MA plans to spend at least 85 percent of their payments on medical care for their enrollees.
By focusing on 2010 data and ignoring the impact of ACA changes, the article fails to convey the value of the program to taxpayers. In fact, plans deliver benefits 10 percent below traditional Medicare costs. MA plans have limits on out-of-pocket costs while traditional Medicare does not. And MA plans often offer additional benefits to enrollees for no additional premium.
That’s why MA enrollment has increased by 60 percent since 2010, and why 90 percent of beneficiaries are satisfied with their plan, preventive care coverage, benefits, and choice of provider. Further, as the article notes, the innovative plan practices that lead to these results have even been shown to reduce costs in traditional Medicare.
There is no doubt that parts of health care need to change. But the Medicare Advantage program is not one of them. Instead of attacking MA, we should be taking a closer look at how its best practices can be adapted for other parts of the health care market. After all, it has a proven track record of quality care, improved outcomes, increased innovation, value for taxpayers, and consistent bipartisan support.
Mark Hamelburg is Senior Vice President of Federal Programs at AHIP.