Monday, October 19, 2009

Ending the "Advantage" in Medicare Advantage?

Under Medicare Advantage programs, participants have the option to receive Medicare benefits through private health insurance plans. Participants receive the same benefits as those receiving traditional Medicare, plus certain additional benefits that can include free drugstore sundries and gym memberships. Premiums can be low (or even nonexistent), although some managed care restrictions apply.

Seems like a great deal, right? Where’s the controversy?

Well, part of the reason the plans offer added value to participants is that they receive additional subsidies from the government, as compared to traditional Medicare. Studies have shown that private insurance companies offering Medicare Advantage plans are paid an average of 114 percent of what Medicare pays for fee-for-service Medicare for similar services.

Versions of health care reform in the House and the Senate would each reduce the subsidies paid as part of the Medicare Advantage program. H.R. 3200, for example, would, by 2013, reduce Medicare Advantage payments to match fee-for-service payments. The Baucus bill would transition current Medicare Advantage payments based on statutory benchmarks to payments based on competitive bids from insurances.

Proponents of reducing payments for Medicare Advantage argue that MA offers perks that can be easily cut without affecting participants’ core Medicare benefits. Defenders counter that seniors should not see their benefits cut. Both sides agree on one thing: MA would be less—dare we say it?—advantageous if current reform proposals become law.

(For continued updates on Medicare Advantage and other proposed changes to Medicare in the health reform bills, go to and sign up for free news updates.)


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