Cutting through the lies about seniors’ favorite government program: Sally C. Pipes - Pacific Research Institute

Cutting through the lies about seniors’ favorite government program: Sally C. Pipes

PASADENA, California — Critics of Medicare Advantage, also known as Medicare Part C, have tried to undermine it for years. Now they’re going after it again, this time through the massive Democratic spending bill that’s stalled in Congress.

Never mind that 27 million American seniors out of 64 million Medicare enrollees get their health insurance through Medicare Advantage and rate it highly. The program’s detractors insist that it’s “too expensive.” But let’s consider the criticism at face value.

Does Medicare Advantage cost too much? Medicare Advantage was created in 1997 as a market-based alternative to traditional Medicare. The new plan had two goals: to give patients more choice; and to improve efficiency and deliver savings for the federal government.

Under Medicare Advantage, private insurers compete to offer subsidized plans to enrollees. Currently, there are more than 3,500 plans nationwide.

This thriving marketplace has become increasingly popular. In 2010, the program served about one-fourth of Medicare beneficiaries. Today, it covers more than 40%.

By some indicators, Medicare Advantage beneficiaries are healthier and have better outcomes than traditional Medicare enrollees. They pay as much as 44% less for prescription medications, boast higher rates of vaccination for flu and pneumonia, and are more likely to see a provider for an outpatient visit following a hospital discharge, according to an analysis by the Better Medicare Alliance (BMA), a Medicare Advantage advocacy group. Advantage plans provide a range of benefits not covered by regular Medicare, including dental insurance, hearing aid coverage, and gym memberships.

There’s no question that patients are saving money. Medicare Advantage enrollees pay, on average, just $25 a month. Hospital bills are as much as 23% lower for high-risk patients in Medicare Advantage, the BMA report found, while 98% of those with Medicare Advantage plans are happy with their coverage.

You’d think savings like these would be compelling for a party that claims to want more affordable health care. Instead, progressive Democrats zero in on the fact that the government has to spend marginally more per patient for those in Medicare Advantage than for those who choose traditional Medicare. That may be true in some cases. In 2019, the most recent year with available data, Advantage payments were $11,844 per enrollee — $321 more per person than payments would’ve been if those individuals had traditional Medicare. Across all enrollees, that higher spending totaled an additional $7 billion.

Critics posit those extra dollars are wasteful and merely line the pockets of private Medicare Advantage insurers. But in reality, that minor increase yields an incomparable improvement in benefits, satisfaction, and health outcomes for beneficiaries. In other words, the value of any additional expense may well be higher than the expense itself.

Consider that better vaccination rates achieved under Medicare Advantage have huge benefits to public health and public coffers. Increased uptake of pneumococcal vaccines among older adults, for instance, could save our health care system nearly $2 billion each year, according to a study published in the American Journal of Managed Care. Likewise, being able to buy medications more cheaply under Part C leads to higher rates of adherence to treatment, which keeps people out of hospitals and could save the government hundreds of billions every year.

But progressives in Congress, it seems, can’t bear the idea that a market-based system might perform better than a government-run one. In the latest iteration of Build Back Better, they’re trying to spend nearly $40 billion to have traditional Medicare cover hearing benefits, even though many enrollees already have such coverage through Medicaid or private insurance. Ninety-three percent of Medicare Advantage plans cover hearing. If the Democrats are successful, they’ll weaken the incentive for people to select Medicare Advantage plans.

Medicare Advantage is the rare government program that works well. Anyone who cares about our seniors should support it.

Sally C. Pipes is president, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is “False Premise, False Promise: The Disastrous Reality of Medicare for All” (Encounter 2020). This was written for The Plain Dealer and

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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