A Closer Look at Medicare Advantage’s Value to Seniors and Taxpayers: A Response to Health Affairs

By Greg Gierer, MPP

As Congress and policymakers consider potential reforms to Medicare, there’s no shortage of viewpoints and proposals to consider. Earlier this month, the 2022 Medicare Trustees Report showed an improvement in the financial position of Medicare, including a 2-year improvement in the finances of the hospital insurance trust fund or Medicare Part A.

In June, the independent Medicare Payment Advisory Commission (MedPAC) will release its semi-annual report, which will include refinements to Medicare payment systems and address broader issues affecting the Medicare program, including changes in health care delivery and the market for health care services.

Within this environment, it is no wonder that media coverage and opinion writing on Medicare and Medicare Advantage – the public-private partnership in Medicare where more than 28 million beneficiaries receive coverage today – has reached a fever pitch.

The latest salvo is a new Health Affairs blog from Dr. Richard Gilfillan and Dr. Donald M. Berwick. This is the authors’ follow-up from a two-part blog series from last fall and attempts to rebut critiques of their original work by thought leaders including George Halvorson and Don Crane. Regrettably, the authors’ latest blog post largely rehashes a number of negative claims against Medicare Advantage, while making dubious new claims about the value of the program, particularly for low-income and vulnerable beneficiaries. In fact, Medicare Advantage has a demonstrated track record of success in delivering high-quality and coordinated care to beneficiaries, reduced out-of-pocket costs, enhanced benefits, and superior health outcomes, especially for beneficiaries with chronic health conditions.

In this updated blog post, we will consider some of the authors’ newer arguments and weigh these against recent research and data from Better Medicare Alliance and other sources:

“Leaves many low-income beneficiaries underinsured”

The authors make sweeping claims that Medicare Advantage is leaving many beneficiaries underinsured, exposing them to high out-of-pocket costs and potentially worse health outcomes.

These claims are contradicted by existing research, including an April 2022 report by ATI Advisory which analyzed the most recent Medicare Current Beneficiary Survey (MCBS) data and found that Medicare Advantage beneficiaries save an average of $1,965 a year in total health care expenditures compared to those in Fee-for-Service (FFS) Medicare. Far from contributing to underinsurance, the report found that Medicare Advantage is delivering a 35% lower rate of cost burden for beneficiaries (13% in Medicare Advantage compared to 20% in FFS Medicare). The cost savings found in Medicare Advantage is particularly impactful since the program serves a higher proportion of low- and modest-income beneficiaries than FFS Medicare.

Given that cost burden is highest among low-income beneficiaries, it is encouraging that Medicare Advantage is playing an important role in reducing cost burden for these populations.  As compared to Medicare Advantage, low-income Medicare FFS beneficiaries are nearly twice as likely to face cost burdens while dual-eligibles are over twice as likely to be cost-burdened.

Moreover, the report finds that the cost savings found in Medicare Advantage cuts across all racial and ethnic groups, with Black beneficiaries spending $1,104 less and Latino beneficiaries spending an average of $1,421 less than those enrolled in FFS Medicare.

Drs. Gilfillan and Berwick’s claim of underinsured beneficiaries also ignores Medicare Advantage enrollees’ own lived experiences and perspectives. A new eHealth survey of more than 2,800 Medicare Advantage beneficiaries found that 86% would recommend it to family and friends, and 61% of those previously enrolled in other forms of Medicare prefer Medicare Advantage to their past insurance – numbers that simply don’t support the notion of underinsured consumers.

Thankfully, recent projections show the robust cost protections for Medicare Advantage beneficiaries continuing. The Biden Administration announced that average Medicare Advantage premiums fell another 10% in 2022; dropping to their lowest level in 15 years.

“No demonstrable clinical benefit to patients”

Drs. Gilfillan and Berwick reiterate their claims that “MA harbors an arbitrage game in which CMS consistently overpays MA Plans with no demonstratable clinical benefit to patients.”

We will discuss payment in greater detail later in this blog post, but first, let’s consider the claim of “no demonstrable clinical benefit” to enrollment in Medicare Advantage. It is surprising that the authors would resort to an argument that is so easily debunked.

A robust body of independent research points to consistently better health outcomes in Medicare Advantage than FFS Medicare. For example, a 2020 analysis from Avalere Health found that Medicare Advantage beneficiaries had higher rates of vaccination for pneumonia and the flu, were more likely to receive needed cancer screenings and risk falls assessments, and ultimately had a 43% lower rate of avoidable hospitalizations for any condition and a 5% lower rate of all-cause readmissions.

Separately, 2018 research from Avalere Health found that Medicare Advantage beneficiaries with chronic conditions had 33% fewer emergency room visits than their FFS Medicare counterparts.

For these reasons and more, a May 2021 study in the American Journal of Managed Care which evaluated peer-reviewed research on this subject over the last decade showed that “more than half of analyses find that Medicare Advantage outperforms traditional Medicare on quality, health, and cost outcomes.”

Medicare Advantage Payment

The latest blog continues to rehash arguments related to the “overpayment” of Medicare Advantage plans – a phrase mentioned 24 times across their original two blog posts. First, let’s establish context around whom Medicare Advantage insures and what the federal government receives as a return on its investment.

Medicare Advantage beneficiaries are proportionally lower-income, more diverse, and possess higher rates of social risk factors than beneficiaries in FFS Medicare. Additionally, research from ATI Advisory finds that “a greater percentage of beneficiaries enrolled in Medicare Advantage report having more than three chronic conditions.”

In other words, Medicare Advantage beneficiaries often present unique, complex health care needs that may require greater upfront cost to manage their care. The increasingly vulnerable population in Medicare Advantage makes the better health outcomes that we discussed earlier – from fewer avoidable hospitalizations and readmissions to more preventive screenings – all the more significant.

Medicare Advantage also stretches the Medicare dollar further to provide more benefits than FFS Medicare, all without extra funding from the government. Benefits such as vision, hearing, dental, and wellness coverage are nearly universal across Medicare Advantage plans, while offerings such as meal benefits and transportation between physician appointments are now offered by 57% and 46% of Medicare Advantage plans, respectively.

Non-partisan experts have recognized that Medicare Advantage has consistently provided benefits more efficiently than FFS Medicare and that “plan efficiencies have led to more competitive bids that enable plans to offer greater coverage of extra benefits.”

Most recently, An October 2021 actuarial analysis from Milliman found that per-member, per-month spending in Medicare Advantage is nearly $7 lower than per-member, per-month spending for beneficiaries of similar health status in FFS Medicare ($942.43 in MA vs. $949.39 in FFS). The research additionally showed that Medicare Advantage covers the same hospital and physician services at a 24% lower cost than FFS Medicare ($709.66 in MA vs. $935.67 in FFS).

While Drs. Gilfillan and Berwick attempt to question the veracity of the savings found in Medicare Advantage in the report, they cannot deny the report’s unequivocal statement that “the federal government pays less and gets more for its dollar in MA than in FFS,” or its conclusion that “findings suggest that overall MA offers significant value for the government.”

“Largest threat to Medicare solvency and a driver of continued waste of precious social resources”?

Lest there be any doubts as to the authors’ views on Medicare Advantage, they assert in the conclusion of their latest blog that Medicare Advantage represents “the largest threat to Medicare solvency and a driver of continued waste of precious social resources.” This is a serious charge and one of which beneficiaries and lawmakers may have a few thoughts.

As noted earlier, the 2022 Medicare Trustees Report projects an improved fiscal outlook for Medicare—including a two-year extension and improvement in the Medicare Part A Trust Fund’s finances.  Moreover, the report also examines Medicare Advantage spending and projects that the MA “per capita bid trend is expected to be equal to the average per capita growth in per capita Medicare fee-for-service expenditures and benchmark growth.”

In other words, MA spending is roughly in line with Medicare fee-for-service spending but, as noted by other experts, generates additional value to beneficiaries and the federal government via enhanced benefits and lower cost-sharing.

This is the principal conclusion of the Milliman report, which contra to Drs. Gilfillan’s and Berwick’s claims that Medicare Advantage represents a waste of precious social resources, shows that Medicare Advantage generates $32.5 billion in additional value to beneficiaries in the form of enhanced benefits and lower cost-sharing.

Perhaps that’s why a record-setting bipartisan supermajority of 409 members of the U.S. House and Senate signed letters of support for Medicare Advantage earlier this year, showing that Drs. Gilfillan and Berwick do not speak for the broad swath of lawmakers or, most importantly, the millions of beneficiaries who would be adversely impacted if these recommendations to diminish the success of Medicare Advantage were to be enacted.

Conclusion

As Congress and policymakers consider changes to the Medicare program, Medicare Advantage will remain in the spotlight. Better Medicare Alliance will continue to advocate for the more than 28 million Americans who entrust their care to Medicare Advantage today, and the 29.5 million that the Biden Administration projects to be enrolled in the program by the end of this year.

With polling showing a 94% satisfaction rate among Medicare Advantage beneficiaries, it’s clear that seniors and Americans with disabilities deserve – and are eager to protect – the quality, affordable, value-driven care that Medicare Advantage uniquely provides.

While we should discuss ways to further strengthen and improve Medicare and Medicare Advantage, arguments that ignore Medicare Advantage’s better benefits, better outcomes, and lower consumer costs do a disservice to all.

Greg Gierer, MPP is the Vice President of Policy and Research at the Better Medicare Alliance.