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Medicare Advantage: Model for a Stronger Trust Fund


A 17-Year Solve for Medicare Solvency

Man in wheelchair on laptop and talking to a woman

Published Nov 14, 2023 • by AHIP

Is Medicare Advantage really the key for both federal financial security and better coverage and care? New research shows that the Medicare Part A Trust Fund could be extended by as much as 17 years if Part A services in the original Medicare program were used at the same level as Medicare Advantage.

Why this matters: There are two trust funds that taxpayers and the federal government add to each year that finance original Medicare and Medicare Advantage, the two government health care programs that help seniors and people with disabilities.

It’s incredibly important that these programs are run as efficiently as possible to remain financially stable, AKA solvent, and still offer the best care and coverage possible.

Medicare trust fund solvency is a growing concern, with nonpartisan actuaries sounding the alarm about the sustainability of the program’s finances. But fundamental to that concern is the inefficiency of the original Medicare program.

The problem: Original Medicare’s inefficiencies lie in its overuse of services and poorer performance in keeping people out of the hospital. The study found that original Medicare uses hospital and post-acute services at a higher rate than Medicare Advantage. This analysis included adjustments to account for differences in demographics and disease status between the two programs.

These findings are even more noteworthy given that the solvency issue at the heart of the Medicare Part A Trust Fund (which pays for hospital and post-acute care) is often incorrectly attributed to Medicare Advantage rather than the lower-value care in original Medicare.

The bottom line: Medicare Advantage delivers on quality, is good for seniors, people with disabilities, and taxpayers — and it is also good for the Medicare trust fund.

  • Read the full study, commissioned by AHIP and conducted by Avalere, here.
  • Read more on why more than 31.5 million Americans — more than 50% of people eligible to enroll — choose Medicare Advantage.
  • New Research: MA enrollees have better outcomes than people in original Medicare.