More than 28.5 million patients are now enrolled in Medicare Advantage plans, according to new federal data. That’s up nearly 9% compared with the same time last year.
Enrollment in MA has been surging for some time. It more than doubled between 2011 and 2020. By 2026, the program’s beneficiaries are expected to account for more than half of the Medicare population.
But you wouldn’t guess that from left-leaning critics’ characterization of the program as “controversial” and an “unaccountable cash cow“—one that offers “no demonstrable clinical benefit to patients.”
Nothing could be further from the truth. Seniors are flocking to Medicare Advantage because it provides better benefits at lower cost.
Medicare Advantage plans are administered by private insurance companies that contract with the federal government. Most plans bundle hospital, outpatient, and prescription drug coverage.
The issue with the program, say its critics, is that the government pays slightly more for each Advantage beneficiary than it does for each person covered by traditional Medicare. They lament that MA spending is inefficient and simply pads the finances of private insurers.
It’s true that the government spent $321 more for each Medicare Advantage enrollee in 2019. If every senior with Advantage had been enrolled in traditional Medicare, the government could have saved a whopping $7 billion—less than 1% of overall Medicare spending.
In other words, the extra spending is a blip on the federal balance sheet. And it’s just a fraction of the $25 billion worth of “improper payments”—fraudulent payments, payments made with insufficient documentation, and more—that Medicare made from 2019-2020.
But the marginal extra cost yields huge benefits for Medicare Advantage enrollees.
Consider that nearly all Advantage plans provide additional benefits that traditional Medicare doesn’t cover, such as vision, hearing, and dental services. In fact, 99% of Medicare Advantage plans offer some coverage of eye exams or glasses. Ninety-seven percent cover hearing exams and hearing aids, and 94% provide dental benefits.
One in five traditional Medicare beneficiaries doesn’t have supplemental insurance, leaving them to pay out of pocket for these benefits. Another third of seniors with traditional Medicare pays for a Medigap plan, which can cost them up to $3,600 in annual premiums.
That’s in addition to the premiums and out-of-pocket costs already associated with traditional Medicare—typically about $5,000 each year.
Meanwhile, the average senior with Medicare Advantage spends less than $3,400 on their insurance each year.
MA enrollees tend to have better health outcomes than their peers covered by traditional Medicare. A Health Affairs analysis of nearly 50 studies found that Medicare Advantage enrollees have more preventative care visits and fewer emergency room visits.
They’re also more likely to receive depression screenings and pneumonia vaccines. And among seniors with “complex chronic conditions,” MA beneficiaries are 57% less likely to experience an avoidable, short-term hospitalization, according to the Better Medicare Alliance.
Perhaps that’s because Medicare Advantage insurers operate in a private market. Since they have to compete with one another and keep their costs below a federal benchmark, insurers have an incentive to provide the best coverage to their patients at the lowest price. That ends up preventing more catastrophic health issues down the road.
Those market pressures have driven up the quality of Advantage plans over time. Each plan is rated on a scale of one to five “stars” based on its quality and beneficiaries’ satisfaction. This year, more than 70 received a “five-star” rating—nearly quadruple the number of five-star plans compared to 2021.
In contrast, as former Kaiser Permanente CEO George Halvorson wrote in a recent blog post, traditional Medicare “has no quality care processes, no quality reports and no quality standards or expectations at all.”
Taken together, it’s no surprise Medicare Advantage is so popular among enrollees. According to the Better Medicare Alliance, 98% of beneficiaries are satisfied with their coverage.
Medicare Advantage brings healthcare costs down without sacrificing quality. That’s something any senior advocate should support.
Sally C. Pipes is president, CEO, and the Thomas W. Smith fellow in healthcare policy at the Pacific Research Institute. Her latest book is False Premise, False Promise: The Disastrous Reality of Medicare for All, (Encounter 2020). Follow her on Twitter @sallypipes