Medicare Advantage Is Advantageous

By:  Janet Trautwein

With barely a minute to spare before Santa Claus came to town, the Senate voted
on Christmas Eve to enact a major overhaul of the country’s health care system.
Many Americans are now wondering how the reform bill will affect their
insurance coverage. Will their premiums go up? Will they have to switch to a
different plan?

 

For the 11 million senior citizens currently enrolled in the Medicare Advantage
program, life could become a lot more complicated. Congress is set to cut this
popular program by $172 billion over the next decade and use the proceeds to
fund other provisions of health care reform. As a result, this sizeable
population of Medicare patients could lose its coverage — and unwittingly drive-up
the cost of health care for everyone else.

 

The Medicare Advantage program provides patients with the freedom to customize
their care. An enrollee can choose among various privately administered health
plans and select the one with the benefits and premiums that best suits his or her
needs. Participating insurers have to compete for customers. That leads to
lower prices, more expansive cost-sharing, and better benefits.

Under traditional fee-for-service Medicare, by contrast, seniors have no choice
of plans. Doctors, hospitals, and other health care providers are directly
reimbursed by the government according to a preset formula. If a senior needs a
treatment that’s not on the government schedule, he has to pay for it out of
his own pocket.

Critics of Medicare Advantage claim that it’s too expensive. A study from the Medicare
Payment Advisory Commission found that the government pays 13 to 17 percent
more, on average, for an Advantage plan than it does for a traditional Medicare
plan.

But those extra dollars flow directly to senior citizens and translate into
better benefits and superior care. On several key quality indicators, including
breast cancer screenings, annual flu vaccinations, and diabetes testing, Medicare
Advantage beneficiaries score better than those covered by traditional Medicare.
Moreover, enrollees in Medicare Advantage are screened and diagnosed earlier
for cervical cancer, colon cancer, melanoma, and other deadly diseases.

 

Does it really make sense to scrap a program that’s making seniors healthier?

 

What’s more, the Medicare Advantage program helps keep health costs for those with
private insurance lower than they would be if every senior were consigned to
traditional Medicare.

 

How’s that?  Health care providers are generally not reimbursed for the full cost of
treating patients covered by traditional Medicare. In California in 2005, for instance, Medicare
only paid about three-quarters of its patients’ hospital costs. So doctors and
hospitals routinely lose money when treating Medicare beneficiaries.

 

They compensate by charging privately insured patients more. Such cost-shifting results
in bigger medical bills and higher insurance premiums for non-Medicare patients
— to the tune of a whopping $49 billion a year.

Medicare Advantage, on the other hand, tends to reimburse health care providers
at cost. As a result, Medicare Advantage beneficiaries do not ramp-up private
health costs nearly as much as patients in the traditional program.

By gutting Medicare Advantage and thereby relegating its beneficiaries to
traditional Medicare, the Congress’s health reform plan would exacerbate the
cost-shifting phenomenon. Private payers’ medical bills would skyrocket as they
absorb the costs shifted their way by millions of new Medicare beneficiaries.

 

Democrats are close to making their health
reform dreams a reality. But they may come to regret their legislative haste. Cutting
Medicare Advantage would compromise the care of millions of seniors and
exacerbate our health system’s cost problems.

Janet Trautwein is CEO of the National
Association of Health Underwriters.