Medicare Advantage

Medicare Advantage is the latest iteration of health plan risk contracting for CMS and has been the most successful, at least in terms of enrollment.  An article in the NEJM summarizes where the program is today and might go in the future.   (NEJM Article)   From 2005 to 2018 Medicare Advantage enrollment grew from 6 million beneficiaries to 20 million, or 34% of all Medicare members.  By 2028, enrollment is expected to be 42% of beneficiaries, but I believe that is an under-estimate.  The current population aging into Medicare includes people who have spent most of their adult lives in a health plan of some sort, so they are very comfortable continuing that into Medicare.  I believe that by 2028, it is likely that at least half of all beneficiaries will be in MA.  The popularity of MA is due to the fact that it typically includes more benefits than fee-for-service Medicare and it has come to offer a more personalized service.  The health plans participating in MA usually have a limited network, or a PPO design and use more care management techniques, which can inhibit some beneficiaries from joining, but they lower the cost because they have out-of-pocket limits and many cover copays and deductibles that otherwise would be present in fee-for-service Medicare.  About one-third of beneficiaries in the traditional program have out-of-pocket costs that exceed 20% of their income, that rarely occurs in MA.  Medicare Advantage also often adds additional care, like dental and vision or transportation services and under new rules, will soon be able to offer even more benefits, like providing meals.

While MA plans have historically been accused of having healthier enrollees, I very much doubt this to be case any longer.  Currently, MA enrollees tend to be less educated, more likely to be low-income and to be Hispanic.  Many of these characteristics are typically associated with higher medical need and spending.  And under current compensation methods, plans are actually invented to seek out sicker, higher cost beneficiaries.  It is also a matter of controversy whether a Medicare Advantage member costs more than the same person would in fee-for-service Medicare.  If they do, it isn’t by much and it is because CMS and Congress have chosen not to use full competitive bidding to set payments and because they haven’t fully accounted for potential differential coding issues.  Plan choice has become excellent for almost all beneficiaries with multiple options, and almost always a zero-premium plan.  However, many beneficiaries have difficulty making a good choice, due to either cognitive limitations or the inherent uncertainty in figuring out the best plan for their situation.  While the article implies that quality differences are uncertain, almost every study using a process or outcome measure has found better quality in MA.  Better satisfaction may be uncertain, but that is a limited actual health care service quality measure.  Higher disenrollment rates for dual-eligibles is also cited, but the factors behind this are more complex than some potential lack of quality in the plan.  Most studies show better actual quality of care for this group, which is actually highly sought after by most MA plans.   The dis-enrollment may reflect issues around Medicaid eligibility and the fact that this group has more issues with good decision-making in general.

If the Medicare for all crowd were talking about MA, I would be pretty enthusiastic.  A fully vouchered, choice of plan, system could work very well to constrain national health spending while improving care outcomes.