A Closer Look at Medicare Advantage’s Value to Seniors and Taxpayers: A Response to Health Affairs
By Greg Gierer, MPP
As Congress mulls possible Medicare reforms as part of a budget reconciliation deal, there’s no shortage of viewpoints for policymakers to consider.
In recent weeks, media coverage and opinion writing on Medicare and Medicare Advantage – the public-private partnership in Medicare where 27 million beneficiaries receive coverage today – has reached a fever pitch.
The latest contribution to this discussion came from a two-part Health Affairs blog series by Dr. Richard Gilfillan and Dr. Donald M. Berwick. Unfortunately, the authors’ blog post includes a flurry of negative claims against Medicare Advantage, comparing its continued success to an “epidemic” and seemingly taking issue with the nearly 25-year-old program’s existence, which they call “fundamentally flawed.”
In this blog post, we will consider some of the authors’ arguments and weigh these against recent research and data from Better Medicare Alliance and other sources:
“Creating excessive costs for Medicare beneficiaries”
Among the authors’ more pointed claims is that the Medicare Advantage business model is “creating excessive costs for taxpayers and Medicare beneficiaries.”
Medicare Advantage beneficiaries are Medicare beneficiaries. Today there are 27 million of them, so in evaluating this claim it is important to consider what they pay.
The most recent Medicare Current Beneficiary Survey (MCBS) data shows that Medicare Advantage beneficiaries save an average of $1,640 a year in total health care expenditures compared to those in Fee-for-Service (FFS) Medicare, resulting in a 40% lower cost burden for beneficiaries. 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.
Thankfully, recent projections show those cost savings continuing. The Biden Administration announced that average Medicare Advantage premiums will fall another 10% in 2022; dropping to their lowest level in 15 years.
“No demonstrable clinical benefit to patients”
Drs. Gilfillan and Berwick argue 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.”
The Health Affairs blog series further claims that MedPAC, the Medicare Payment Advisory Commission, has shown Medicare Advantage “cherry picking counties with favorable benchmarks” when determining where to provide coverage.
Perhaps the authors should read MedPAC’s findings more closely: according to MedPAC’s own reporting, “99% of Medicare beneficiaries have access to an MA plan.” Separately, CMS reported that, in 2021, Medicare Advantage plan choices reached an average of 47 plans per county. This level of access is hardly cherry-picking.
Medicare Advantage Payment
Central to the authors’ argument is the supposed “overpayment” of Medicare Advantage plans – a phrase mentioned 24 times across their 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 analysis from Health Management Associates found that FFS Medicare spending per beneficiary is 6.4 percent higher than Medicare Advantage spending per beneficiary.
Lest there be any doubts as to the authors’ views on Medicare Advantage, they assert in the second of their two blog posts that the “MA program is fundamentally flawed.” This is a serious charge and one of which beneficiaries and lawmakers may have a few thoughts.
The facts: Medicare Advantage receives a 98% consumer satisfaction rating according to pollsters at Morning Consult. The number rises even higher for non-white beneficiaries. The same polling data found that 93% of Medicare Advantage beneficiaries consider a candidate’s support for Medicare Advantage to be important to earn their vote, and 91% of beneficiaries oppose any cuts to the program, even when pitched (often disingenuously) as necessary to “lower costs for taxpayers and reduce the national debt.”
These findings align closely with Congress’s support for the program: a bipartisan supermajority of 403 lawmakers signed letters of support for Medicare Advantage just last year.
This suggests that the blog post does not represent the views of most policymakers 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.
As members of Congress continue their work on budget reconciliation legislation, Medicare Advantage will remain in the spotlight. Better Medicare Alliance will continue to advocate for the 27 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 next year.
Seniors and Americans with disabilities deserve the quality, affordable, value-driven care that Medicare Advantage uniquely provides. While we should discuss ways to reform and improve Medicare and Medicare Advantage, arguments that ignore Medicare Advantage’s better benefits, better outcomes, and lower consumer costs do a disservice to policymakers.
Greg Gierer, MPP is the Vice President of Policy and Research at the Better Medicare Alliance.