The Advantage of Medicare Advantage

By September 25, 2009November 2nd, 2009Commentary

Insurers and drug companies are the easiest villains to target in the health system, so it is not surprising that one source of funding for expanding access is reducing the payments health plans receive through the Medicare Advantage program.  The plans receive more in payments than it would likely cost Medicare for the same patients in the fee-for-service aspect of Medicare.  But enrollees in the Medicare Advantage plans receive better benefits than they would get under traditional fee-for service Medicare and the Medicare Advantage plans do a far better job of managing the quality of care and encouraging healthy behaviors than does traditional Medicare.  As would be expected, America’s Health Insurance Plans, the primary industry trade association, is pointing out some of the benefits that flow from the Medicare Advantage program, benefits which might be lost if Congress discourages either participation by plans in the program or enrollment by seniors in the plans.  (AHIP Paper)

The study compares rates of hospitalization, re-admission and potentially avoidable admissions in California and Nevada for Medicare Advantage and fee-for-service enrollees.  For comparable patients, hospital days were substantially lower for Medicare Advantage, as were readmissions, and potentially avoidable admissions were slightly lower.  While Pete Stark, a notoriously anti-industry, pro-single payer Congressman, blasted the study; it appears to be methodologically sound and is consistent with other studies that show managed care organizations are generally good at what they are supposed to do–manage the quality and cost of care.  While there likely are savings available in what is paid to the plans, they clearly are delivering better care and better benefits than traditional Medicare and Congress might best serve seniors by figuring out to encourage more of them to utilize the Medicare Advantage option.

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