Earlier this month, officials at the Centers for Medicare and Medicaid Services announced that theyd increase payments in the market-based Medicare Advantage program by 3.3 percent next year.
The decision is remarkable, as CMS hinted just two months ago that it would reduce payments by 2.2 percent in 2014.
The CMS flip-flop is good news for seniors and taxpayers alike. But Medicare Advantage is not out of the woods yet. Obamacare is set to slash hundreds of billions from the program over the next 10 years.
Thats a mistake. Medicare Advantage delivers better care at lower cost than does conventional Medicare. The program should be expanded not cut, as the president and his allies advocate.
Some 14 million seniors more than a quarter of all beneficiaries have enrolled in Medicare Advantage.
Under the terms of the program, beneficiaries choose from among several privately administered plans. Insurers compete for seniors business by offering plans with a variety of coverage levels and out-of-pocket costs. That competition drives down costs and grants seniors access to services and benefits that they often cannot get through traditional Medicare.
The cuts CMS contemplated would have had a disastrous impact on seniors care. If the cuts had gone through, MA plans would have faced revenue reductions of 6.9 to 7.8 percent in 2014, according to a report from Oliver Wyman, a consultancy.
Consequently, seniors would have had to deal with higher out-of-pocket costs, fewer benefits, and fewer plan choices.
Even worse, as the report pointed out, individuals with lower incomes and those more likely to need medical services [would] be particularly adversely affected. The payment reductions would have caused insurers to eliminate dental services and coverage of over-the-counter medications for many low-income seniors who cannot afford or are legally barred from paying higher premiums.
CMSs proposed cuts would have come on top of $202 billion in cuts to Medicare Advantage prescribed by Obamacare. Taken together, seniors would have been facing benefit cuts and cost increases of as much as $90 a month or more than $1,000 a year.
By reversing course, CMS has apparently decided to let Obamacare slowly bleed Medicare Advantage to death.
The Congressional Budget Office estimates that Medicare Advantage will have 4.8 million fewer participants in 2019 than it would have in the absence of Obamacare thanks to the laws cuts to the program.
Thats Obamacares goal. Because Medicare Advantage relies on private insurers to deliver health benefits, its never been popular with lawmakers who would prefer that the government exert total control over seniors health care.
To justify gutting the program, critics point out that the average MA plan costs about 10 percent more than conventional fee-for-service Medicare, according to the Congressional Budget Office.
But MA plans offer beneficiaries additional benefits or premium rebates that amount to 13 percent of traditional Medicares costs. In other words, Medicare Advantage patients are getting 3 percent of additional benefits things like preventive care, vision, dental, and chronic disease management for free.
Not surprisingly, those additional benefits lead to much better health outcomes for the MA population compared to those with traditional fee-for service Medicare. MAs beneficiaries score better on a number of key quality indicators, including screening for breast cancer, diabetes and lipid testing, flu vaccines, and beta-blocker prescriptions following heart attacks.
Further, contrary to the Obama Administrations claims, the program actually saves taxpayers money.
A team of Harvard economists, including a former advisor to President Obama, recently found that Medicare Advantage programs can provide the same level of benefits as conventional Medicare for 13 percent less.
In other words, MA can provide the same level of coverage as traditional Medicare for 87 cents on the dollar. Youd think that policymakers looking to rein in Medicare spending might want to expand such a cost-effective program.
Seniors are fortunate that CMS backed off its plan to cut Medicare Advantage. Now if only the Obama Administration would follow its lead and scrap its own plans to gut the program. No less than the health of millions of seniors is at stake.