Improvements For Everyone Else

When the predecessor to Medicare Advantage was established, there were two key arguments made for it: first, that it would move Medicare to a system of care coordination, thereby improving health care for seniors and people with disabilities. Second, it would create efficiencies in a manner that would reduce program costs. Today, neither of these attributes are the hallmark of Medicare Advantage.

Too many Medicare Advantage plans provide little or no coordination. Indeed, the fastest-growing component of Medicare Advantage -- private fee-for-service -- simply takes the old fee-for-service system in traditional Medicare and transplants it to the private health plans at a much higher cost.

It is by now well-established that Medicare Advantage is considerably more costly than providing coverage through the traditional Medicare program. According to the Medicare Payment Advisory Commission, those costs are approximately 14 percent greater than what the costs would be if Medicare Advantage enrollees were in traditional Medicare. Among the private fee-for-service plans, those costs are approximately 19 percent higher.

When Congress realigns costs so that Medicare Advantage payments are close to the costs of traditional Medicare, there may be some loss of benefits for the 1 of 5 people currently in Medicare Advantage. However, for the 4 of 5 Medicare beneficiaries who are not in Medicare Advantage, improvements will be readily apparent. By reducing the over-payments to Medicare Advantage, premiums can be reduced and the life of the Medicare Trust Fund can be lengthened. At the same time, America's taxpayers will no longer bear the burden of unjustifiable windfall payments to private health plans.

By Ron Pollack  |  September 29, 2009; 11:43 AM ET  | Category:  Medicare Save & Share:                 
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