MEDICARE

 The Conversation -  Medicare Advantage – the commercial alternative to traditional Medicare – is drawing down federal health care funds, costing taxpayers an extra 22% per enrollee to the tune of US$83 billion a year. Medicare Advantage, also known as Part C, was supposed to save the government money. The competition among private insurance companies, and with traditional Medicare, to manage patient care was meant to give insurance companies an incentive to find efficiencies. Instead, the program’s payment rules overpay insurance companies on the taxpayer’s dime.

We are health care policy experts who study Medicare, including how the structure of the Medicare payment system is, in the case of Medicare Advantage, working against taxpayers.

Medicare beneficiaries choose an insurance plan when they turn 65. Younger people can also become eligible for Medicare due to chronic conditions or disabilities. Beneficiaries have a variety of options, including the traditional Medicare program administered by the U.S. government, Medigap supplements to that program administered by private companies, and all-in-one Medicare Advantage plans administered by private companies.

Commercial Medicare Advantage plans are increasingly popular – over half of Medicare beneficiaries are enrolled in them, and this share continues to grow. People are attracted to these plans for their extra benefits and out-of-pocket spending limits. But due to a loophole in most states, enrolling in or switching to Medicare Advantage is effectively a one-way street. The Senate Finance Committee has also found that some plans have used deceptive, aggressive and potentially harmful sales and marketing tactics to increase enrollment.

Researchers have found that the overpayment to Medicare Advantage companies, which has grown over time, was, intentionally or not, baked into the Medicare Advantage payment system. Medicare Advantage plans are paid more for enrolling people who seem sicker, because these people typically use more care and so would be more expensive to cover in traditional Medicare.