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Given the free market aspects of Medicare Advantage (MA), Americans should be concerned about efforts to undermine and cut this form of coverage, as it is an attempt to push more people into a Medicare for All system.
Medicare Advantage health coverage, or Part C, is provided through private plans rather than government-run plans, as it allows private insurance companies to compete for Medicare beneficiaries’ business. This stands in contrast to Traditional, or Fee-for-Service (FFS), Medicare, which is government-run coverage that requires individual enrollees pay separate monthly premiums for each service rendered.
MA plans are popular. According to the Better Medicare Alliance, MA covers 32 million people, accounting for more than 51 percent of people with Medicare. It delivers an average $2,434 more in savings to beneficiaries than those under FFS Medicare. The average premium for 2023 MA plans is $18 per month. Further, it has a 95 percent consumer satisfaction rating.
The relative success of MA to FFS Medicare is largely due to its free market aspects, which expand healthcare access and promote patient choice.
Last month, the Medicare Payment Advisory Commission (MedPAC) members clashed on which changes to Medicare Advantage they would recommend. As reported in Fierce Healthcare, Brian Miller, a member of the commission, explained that the status report was anti-Medicare Advantage, and only highlighted negative aspects of the program, suggesting bias in the commission.
Taxpayers and beneficiaries should be concerned that this report is the start of a new effort to deliver more cuts to Medicare Advantage.
The Biden Administration has already cut $4.7 billion is Medicare Advantage funding. As Republican Study Committee Chairman Kevin Hern (R-Okla.) explained, this was a calculated step towards establishing Medicare for All:
“Public-private partnerships like Medicare Advantage [MA] provide more choices and better benefits for our seniors; we need to look to the successes of programs like MA and replicate these efforts across other government programs. The private sector has always delivered better results… The end goal is to get everyone – not just seniors – onto government-controlled, Medicare-for-All plans.”
To be clear, this is not a serious effort by President Biden to “reduce spending.”
In reality, Medicare Part A (Medicare hospital coverage) is what is driving the program towards insolvency: last year it lost $3 billion and by 2028 the hospital insurance trust fund will be completely depleted.
On the contrary, according to a report by Milliman, the value of the government’s dollar paid to Medicare Advantage plans is higher than the value of the government’s dollar spent on Traditional Medicare, or FFS Medicare. Milliman estimates that the value of the reduced cost sharing and additional benefits is $123 per member per month, “$48 for the reduction in cost sharing for Medicare-covered services and $76 for the value of additional benefits not covered by Traditional Medicare.” In all, Medicare Advantage adds $32.5 billion in value to the federal government and beneficiaries.
If the Biden Administration is serious about reducing costs, it would focus on the primary drivers of insolvency – not gutting a highly popular, more efficient form of coverage.
In contrast, the Trump Administration focused on buttressing Medicare Advantage. President Trump increased Medicare Advantage plan choices by the thousands and signed an executive order in 2019 that established new guidelines to foster innovative benefit structure, plan designs, payment structure, etc.
The motivation behind undermining Part C is obvious: the Left is uncomfortable with the competitive, free-market aspects of Medicare Advantage and they would much rather have government-run Medicare for All.