Medicare Advantage – A Murky Future?
Medicare Advantage, an insurance plan that uses private firms such as Humana and UnitedHealth Group to deliver Medicare benefits, has been significantly affected by the recently enacted Health Care Reform Bill. Approximately ten million seniors are enrolled in these plans. Bottom line, their future is murky, at best, since federal subsidies to the tune of $132 billion used to support them are going to be phased out beginning in 2011. Will Medicare Advantage survive?
That question is up in the air, although there is some support for the notion that Medicare Advantage will still be available to seniors. For a little insight, it's well to take a look at what Speaker Pelosi says about it in Health Insurance Reform: A Guide for Seniors:
Q. What if I’m on Medicare Advantage? Will Medicare Advantage plans still be available?
A. Yes, private Medicare Advantage plans will still be available under health care reform. Currently, about 24 percent of America’s seniors are in Medicare Advantage plans rather than in traditional Medicare. Since 2003, these plans have cost U.S. taxpayers more than traditional Medicare—overpaying private insurance companies by an average of 14%, and in some regions of the country as much as 20%. Those profits cost all Medicare enrollees more. In fact, a typical older couple enrolled in traditional Medicare will pay $90 extra in premiums next year to help pay for profits to the Medicare Advantage private insurance companies. The reform bill significantly reduces these overpayments to Medicare Advantage plans.
Many MA plans will continue to offer their services under the new payment system. The plans that are able to operate efficiently and provide extra value to their enrollees through care coordination will continue to flourish. Indeed, under the reform bill, high-quality MA plans will be able to earn bonus payments, which will encourage these plans to move toward higher quality and better care for their enrollees. If an MA plan chooses to leave the market, people will have choices of other MA plans in their community as well as the choice of a stronger traditional fee-for-service Medicare program to choose from.
The nonpartisan Congressional Budget Office estimates that, under health reform, there will be about 9 million seniors enrolled in Medicare Advantage plans in 2019—not many fewer than the 10.5 million seniors enrolled today.
I personally suspect the Speaker is expressing a good deal of wishful thinking. We know that these plans have been enormously profitable for private insurers just based on the hype endlessly blasted for them on the tube. Take away the federal subsidy incentive (overpayment or not), and what's left? The Speaker refers to unspecified "bonus payments" for companies that continue to operate efficiently and provide extra value to insureds. That's awfully vague.
I'm all for saving $132 billion, but have a problem with it when it's my ox being gored. I currently have a Medicare Advantage plan that protects me from a financial catastrophe in the event my health care costs climb into the stratosphere. It's current cost to me is modest, and I receive good value for what I pay. In all probability, I'm going to lose that protection in the future - at least, at an affordable cost.
Even if some insurers do continue offering something they call Medicare Advantage, the "advantages" no doubt, will be significantly diminished. Out of necessity, coverage will have to be reduced, and premiums will have to be boosted.
There are some significant benefits flowing to seniors under Health Care Reform, as outlined in Speaker Pelosi's guide noted above - a narrowing of the "donut hole", payments for preventive care and so on. But, I'm left to wonder if what I stand to gain will be more than offset by the potential for added personal expense with the weakening, if not elimination, of Medicare Advantage. Presently, the answers are unclear. It'll take time for these obscurities to play themselves out.
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