In an op-ed for Health Affairs, Ken Terry and David Muehlestein explain why expanding the Medicare private insurance option to everyone or “Medicare Advantage for All” is a bad idea. Among other things, we can’t distinguish among Medicare Advantage plans or prevent plans from jeopardizing the health and well-being of their members through narrow networks with poor quality providers, cumbersome administrative hurdles, inappropriate delays and denials of care and high out-of-pocket costs. According to one recent NBER paper by Jason Abaluck at Yale et al., picking the wrong Medicare Advantage plan could kill you.
Here’s what we know:
- Medicare Advantage per member costs are higher than per member costs in traditional Medicare and have been since Medicare Advantage’s inception.
- More than one in three people in Medicare Advantage plans are in plans with narrow provider networks.
- In Alaska and Wyoming, fewer than five percent of people with Medicare are in MA plans. No MA plans are available in Alaska, and Wyoming has only one plan.
- Medicare Advantage plans are not as good at reining in per-member costs as traditional Medicare. In 2019, MA costs increased 6.3 percent while traditional Medicare costs increased 2.4 percent. On average, per member payments to Medicare Advantage are 2 percent higher than traditional Medicare.
- Medicare Advantage plans profit handsomely from Medicare, with annual gross margins of $1,608 per member between 2016 and 2018. They are driving up Medicare Part B premiums and draining the Medicare Trust Fund.
Here’s what we don’t know:
- Why does Medicare Advantage have faster cost growth per member than traditional Medicare?
- Which, if any, Medicare Advantage plans offer better quality care than traditional Medicare? The data is not available. Studies that report overall data on Medicare Advantage plans are misleading at best. What’s important to know is individual plan performance. Reports of average performance are analogous to saying that houses in a community are better than average. The question is which ones specifically.
- Data show that people with high costs tend to leave Medicare Advantage at high rates.
- Health insurers say they spend 20 to 40 percent less on care than traditional Medicare. We know that they are paying providers about the same rate as traditional Medicare. Which Medicare Advantage plans are withholding needed care and which are preventing costly overtreatment? How much money is going to profits and would that money be better spent on additional benefits?
Here’s more from Just Care:
- MedPAC: Traditional Medicare consistently costs less than Medicare Advantage
- Well-kept secrets of Medicare Advantage plans
- Four things to think about when choosing between traditional Medicare and Medicare Advantage plans
- Programs that lower your costs if you have Medicare
- Need a crown or dental implant? Consider a trip to Mexico
