Taking advantage of Medicare Advantage
It's hard to believe, but Medicare's Open Enrollment season began last week. And this year, as a result of the federal health reform law, seniors will have to brace for several changes.
Seniors who rely on privately administered Medicare Advantage plans for their benefits will face the biggest adjustments. That's too bad, as Medicare Advantage has a strong track record of delivering health benefits that meet or even exceed those of conventional Medicare.
Medicare Advantage (MA) offers enrollees a different way of receiving their Part A hospital and Part B physician care. Under the program, private insurers offer competing plans, and patients themselves choose which coverage option works best for their particular health and financial needs. MA insurers must provide at least the same benefits as traditional Medicare, but most offer more. The government reimburses insurers at a preset rate per enrollee.
More than 12 million seniors participate in Medicare Advantage, about one-fourth of all those eligible for Medicare. The pool of MA beneficiaries has more than doubled since 2005.
The program has grown popular thanks in large part to its competitive structure, which encourages insurers to vie with one another for seniors' health care dollars and thus provides them more choices.
But some policymakers believe the MA program to be wasteful. They cite the fact that Medicare Advantage costs the government more per enrollee than does traditional Medicare. They believe seniors would be better served if everyone were enrolled in the traditional Medicare program.
To aid in that pursuit, the PPACA law included a provision that changes the special Medicare Advantage Open Enrollment period that occurs each year in January. Previously, Medicare beneficiaries were allowed to either change from one Medicare Advantage plan to another Medicare Advantage plan or to change from Medicare Advantage to traditional fee-for-service Medicare. Beginning in January of 2012, seniors will only be allowed to opt out of the Medicare Advantage plan they chose in 2011 to enroll in traditional fee-for-service Medicare.
That's just part of the pending assault on Medicare Advantage. This year, the health reform law froze Medicare Advantage payment rates to participating insurers at 2010 levels – that is, it didn't allow reimbursements to be adjusted for inflation. Next year, payments will be cut even further. And over the next decade, Medicare Advantage funding is set to decline by $132 billion. By 2017, government number crunchers expect that benefits for the average MA enrollee will be slashed by 27 percent, or $3,700.
The Congressional Budget Office (CBO) estimates these changes alone will cause some Medicare Advantage plans to exit the program and that as a result, enrollment will drop to 7.4 million by 2017. Medicare's actuaries actually predict an even steeper fall-off of 50 percent.
Some speculate that those who dislike Medicare Advantage want to use these methods to marginalize Medicare Advantage to the point of non-existence. This is exactly what happened to Medicare + Choice in the late 1990s when payments got so low that plans were forced to leave large areas of the country, especially in rural areas.
That's a shame, as Medicare Advantage delivers more benefits – and superior outcomes – than traditional Medicare. According to the CBO, individual patients enjoy many value added services that help them maintain their health and well-being, such as lower co-pays, premium rebates and coverage or deep discounts for services like dental work and eyeglasses.
MA beneficiaries are also much healthier than their counterparts in traditional Medicare. A 2004 study found that MA plans achieved better outcomes than traditional Medicare in five of seven core indicators, including breast-cancer screenings, diabetes testing and treatment after heart attacks.
Advantage enrollees in California spend 30 percent fewer days in hospitals than those in traditional Medicare. In Nevada, they spend 23 percent fewer days. Less time in the hospital is good news not just for patients – but for federal coffers, too.
Medicare Advantage represents just the kind of innovative health care model that could help drive down long-term health costs and improve health care in this country. Congress should make it easier to opt in, not out. And if seniors want to change plans, they should have a full range of choices available to them.
Janet Trautwein is CEO of the National Association of Health Underwriters.