The Great Debate - Medicare Advantage (MA) vs. Medicare

Originally promoted as the answer to Medicare's skyrocketing health care and administration cost, Medicare Advantage plans have been falling short on many of its promises. Praised as an alternative plan that would offer more choices to the enrollees and reduce cost through competition and managed care, while saving the tax payers money, they has been creating the exactly opposite outcome. The rising cost of these alternative private health care plans is forcing Medicare to retrench and consider cost increase to offset the higher operating cost of the Medicare Advantage plans.

Congress created MA plans to save Medicare money and now they are paying out even more. A decision regarding the continuation of this type of plan is more than an ideological one; it is a decision that will affect the future of Medicare. According to the latest GAO reports, in 2006 Medicare paid $7.1 billion more through the MA plans than it would have paid if the same people were enrolled in the regular Medicare plan. For 2008, a 13% increase is expected. Over the next three years, excess MA payments are expected to amount to $54 Billion. Medicare is looking at increasing Part B premiums as a potential solution. Medicare Part B premiums cover doctors' visits and outpatient treatment for enrollees. This would result in the majority of Medicare beneficiaries being charged a higher premium for excess payments that benefit relatively few.

The Medicare Modernization Act of 2003 was enacted to reduce payments to physicians who treat traditional plan Medicare patients. It expanded the role of Medicare Advantage plans and gave them larger payments which attracted a large number of enrollees by offering better benefits at a lower cost than traditional Medicare. MA enrollees now account for over 20% of all Medicare beneficiaries. On average, the MA enrollees' benefits cost just over $1100 more per year than the traditional plan participants. There are approximately 35 different MA plans for beneficiaries to choose from. Currently the most controversial is the Private Fee for Service (PFFS) plan.

PFFS plans are not subject to the same rules and standards as the Medicare Advantage's HMOs and PPO plans. PPFS plans allow the enrollee to choose their providers. Enrollment in this program have increased eightfold in the past two years and Medicare is spending 17% more on the enrollees than they would had they remained in the traditional Medicare plan. As enrollment in the various MA plans increase so does their expense of operation. Many fear a tipping point will be reached sometime in the near future and a very different Medicare program will emerge.

A Medicare program where only the sickest of the sick will remain enrolled in the traditional plan. The cost to operation that plan will become unwieldy, making it appear unworkable, ushering in the potential to privatize Medicare. Medicare's long term fiscal health is at stake. MA plans cost increases the burden on taxpayers and beneficiaries who have to pay higher Part B premiums whether they are in managed care or not. Millions of older American's will suffer from that cause. With millions of baby boomers due to enter the Medicare program over the next several years, it is important to keep it fiscally strong for the long haul.

Eliminating the excessive payments to MA plans and paying them no more than traditional Medicare payments would slow down the growth and cost of many of these plans. Your lawmaker needs to know that you are in favor of this action. Many hesitate to back this type of legislation because you, their constituents, are enrolled in MA plans and a favorable vote may result in the elimination of some plans, it may mean a rise in some of your health care cost, and a reduction in some benefits. Look at it from the point of view, for the greater good of all concern...An affordable Medicare plan for all is better than a private Medicare plan that only benefit a few.

Let your congressmen and senators know you are concerned about skyrocketing Medicare cost. Tell them we need to prevent higher premium cost for older Americans. Email them now and communicate that you agree, Medicare Advantage plans need to be restructured to reflect the same cost as traditional Medicare payments across all plans.

Sources:
Medicare Modernization Act of 2003 - http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=108_cong_bills&docid=f:h1enr.txt.pdf

Fact sheet on MedPAC's Report to the Congress: Medicare Payment Policy - http://www.medpac.gov/documents/Mar09_FactSheet.pdf

Medicare Payment Policy - Report to Congress - www.medpac.gov/documents/Mar05_EntireReport.pdf