By Mike Tuffin, AHIP President and CEO
As policymakers evaluate the long-term outlook for Medicare, the focal point should be on Medicare beneficiaries and how to best serve them – today and tomorrow. Policy should be aimed at meeting the health and financial needs of today’s beneficiaries while ensuring the program remains strong, stable, and innovative for future generations.
Viewed through that beneficiary-centric lens, Medicare Advantage is more important than ever.
More than 33 million seniors and people with disabilities actively choose MA for their Medicare coverage. Because of the value MA plans can generate and the services they provide, seniors enrolled in MA pay less and receive better care.
MA provides enrollees the security of an annual cap on out-of-pocket costs. MA beneficiaries, on average, save more than $2,500 annually compared to those in fee-for-service (FFS). The demonstrably superior value of MA has made it a particularly compelling option for diverse communities and beneficiaries living on low incomes. Large and growing majorities of Black and Hispanic beneficiaries have chosen to enroll in MA. Moreover, the latest data show 38% of MA beneficiaries live on annual incomes of $25,000 or less, compared to 23% of FFS beneficiaries.
Critics of MA will often conveniently gloss over these substantial savings. American seniors decidedly do not.
In addition to these substantial savings, the efficiency of MA plans enables them to provide important benefits unavailable in FFS, such as vision, hearing, and dental coverage; wellness programs; nutrition services, and in-home caregiver support.
MA plans’ enrollee engagement also results in higher rates of use across a wide range of preventive and chronic care services. A Harvard Medical School-Inovalon study last year found that MA enrollees have fewer readmissions, fewer preventable hospitalizations, and lower rates of high-risk medication use than people in FFS. A review of performance on key HEDIS measures found that MA outperformed on 10 of 11, including higher rates of screenings for prevalent cancers and better preventive care and treatment for major chronic conditions such as cardiovascular diseases and diabetes.
The well-quantified differences in value to beneficiaries are often ignored in comparisons of MA to FFS spending – many of which are conducted on an invalid “apples-to-oranges” basis. Research has shown that “apples-to-apples” FFS costs more than government estimates, which suggests MA delivers savings to the Medicare program. A 2021 Milliman analysis found that each dollar spent by the federal government on MA provides beneficiaries with additional benefits and lower cost sharing than they would get under FFS. As a result, the study found “both the federal government and beneficiaries spend less for Parts A and B coverage under MA than FFS.”
Research has also shown the Medicare Part A Trust Fund could be extended up to 17 years if Part A services in FFS were used at the same level as MA.
Looking ahead to the future of the program, MA is also a proven platform for innovation in benefits and care delivery. Dental, vision and hearing benefits; care coordination services; programs to address social risk factors – these are just some of the many advancements initiated in MA.
Serious attempts to secure Medicare for the long-term must grapple with the incentives inherent in FFS and focus on improving health rather than simply responding after illness sets in. MA, distinctively, offers a market-based framework that empowers seniors with real choices combined with payment models rooted in clinical value and a track record of innovation.
As policymakers evaluate the longer-term outlook of Medicare, strengthening and building on MA can ensure the program is both responsive to the needs of beneficiaries and sustainable for generations to come.