Sunday, September 30th, 2012
Back in 2010, when the Affordable Care Act was first passed, a lot of “pundits” predicted Medicare Advantage was doomed. For example, Robert Book and James Capretta of the Heritage Foundation predicted in September 2010 that …
“Regardless of which outcome a particular patient experiences, every patient who would have enrolled in an MA plan under prior law will experience a loss in the value of his or her Medicare coverage. … Instead of reducing waste, the MA cuts will simply cut health care services available to patients and transfer spending from Medicare Advantage to other federal programs and other payers (including patients), thus increasing federal and state spending on Medicaid and patient spending on Part D, supplemental care plans, and out-of-pocket costs.”
Now, two years later — um, they were wrong, folks. Medicare Advantage is doing just fine.
Centers for Medicare & Medicaid Services say that by 2013, Medicare Advantage will have enrolled 28 percent more seniors, while the cost of premiums has dropped for many enrollees, and benefits have not been cut.
We wrote in 2010 that there were all kinds of scare stories about Medicare Advantage going around. Politicians and organizations opposed to Obamacare were spreading stories claiming that Medicare Advantage was being “gutted” by Obamacare.
Compounding the confusion was that another law, passed during the George W. Bush Administration, called for phasing out Medicare Advantage free-for-service coverage by the end of 2010. This was because fee-for-service plans were costing more money than what managed care plans cost. But when people heard about fee-for-service plans ending, they assumed this was the fault of Obamacare.
And it’s no wonder many seniors were nervous about what might happen to their Medicare policies. Private insurance companies don’t want seniors as customers, unless taxpayers are subsidizing the policies. And we all need more health care as we get older. Some ailments — heart disease, arthritis — are common in seniors, and some are rare, such as mesothelioma cancer, which is rarely diagnosed before the patient is 50. But for that reason, there is no way for private insurance to provide affordable insurance to seniors. So, seniors rely on Medicare.
It’s true that the Affordable Care Act made cuts to Medicare Advantage, but that’s because Medicare Advantage programs were costing taxpayers 14 percent more per person than regular Medicare. The Medicare Advantage program pays private insurance companies to enroll seniors in managed-care networks, and the private insurance companies were burning money for marketing and administration, as well as padding company profits with taxpayer dollars.
So to get costs under control, the Affordable Care Act provided that Medicare Advantage companies had to reduce costs to match regular Medicare. The ACA also provides that companies offering Medicare Advantage policies must spend 70 percent of Medicare dollars on patient care.
The private insurance companies grumbled, but they also figured out they could still make a profit on Medicare Advantage plans. And now Medicare Advantage is as popular as ever, and there are plenty of plans to choose from.
However, some politicians are grumbling about another program that pays bonuses to Medicare Advantage companies providing outstanding service. Last week Rep. Darrell Issa, R-Calif., chairman of the House Oversight and Government Reform Committee, accused the Obama Administration of using these bonuses to mask the cuts to Medicare Advantage until after the election. True? We’ll look at that in the next post.