Medicare Advantage Is Booming but with Some Warning Signs

The Medicare Advantage program, which uses private health plans to provide coverage for Medicare beneficiaries, has grown incredibly rapidly and now covers almost half of all Medicare recipients.  The federal government has to start thinking about what it is going to do with the fee-for-service program, which within a few years could be a pretty small fraction of beneficiaries.  Medicare Advantage membership is fairly highly concentrated in a few large national health plans.  UnitedHealth Group is the largest, with 9 million enrollees, 28.5% of all MA members.  Humana has an 18% market share and Aetna about 10%.  The top ten plans have around 80% of all members.  This concentration means that these plans have outsized influence on Medicare policies and may increase costs for both the program.   (MFA Report)

Medicare talked about making more changes to reduce game-playing by plans under which they make members appear sicker than they are to increase reimbursement.  Medicare lessened some of the changes, but I anticipate that eventually CMS, which manages Medicare, will be more aggressive in limiting overpayments.  What is clear from a multitude of research is that the MA plans provide better quality care on many measures and avoid unnecessary utilization.  They keep people out of hospitals and ERs, and focus more on primary and preventative care.  This study in Health Affairs is the most research to demonstrate the superiority of MA in providing quality care compared to fee-for-service Medicare.  (HA Study)  I would tell anyone who is eligible for Medicare to think very seriously about an MA plan, you likely will have no premium, reduced cost-sharing and extra benefits not covered by Medicare.