This essay is an independent contribution by Ciannah Correa, 2022 Rashi Fein Intern on Health Policy. Opinions within are not expressly endorsed by the National Academy of Social Insurance. Please feel free to share your thoughts in the comment section below or reach out to Ariella Jailal, Program Coordinator, at email@example.com with feedback.
In an age of questioning institutions and fighting for social justice, common opinions I see online from people my age are those dissenting against long-term solutions that they perceive as coming at the expense of action now. While some issues do require immediate attention and solutions, this consistent tunnel vision can limit our definition of success and push long-term solutions to the bottom of our priority lists.
As a 22-year-old recent college graduate, I had never given much thought to Medicare or how decisions made about the program today could impact me 43 years from now. That changed this summer while working at the Kaiser Family Foundation (KFF) with the Program on Medicare Policy.
Medicare is one of the most important and well-known social insurance programs. It is a federal insurance system that covers different aspects of healthcare for over 64 million people ages 65 and over as well as certain younger people with disabilities. Medicare provides coverage through Part A, which covers inpatient care, skilled nursing facility (SNF) stays, some home health visits, and hospice care, and Part B, which covers physician visits, outpatient services, preventive services, and physician-administered prescription drugs. Medicare beneficiaries also have the option of enrolling in Part D, which provides outpatient prescription drug coverage through private plans that contract with Medicare. Most beneficiaries are entitled to Part A with no extra premium and pay a monthly premium for Part B depending on their income.
Medicare Parts A and B benefits are provided either through traditional Medicare or Medicare Advantage plans. Medicare Advantage is only available through private insurance companies, and it covers all Part A and Part B benefits and typically also Part D benefits, sometimes for an extra premium.
Medicare Advantage is often advertised as superior to traditional Medicare because of the many supplemental benefits it offers that are not covered by traditional Medicare, the mandatory cap on out-of-pocket costs for Medicare-covered services, the lower premium costs than Medicare Supplemental Insurance (also known as Medigap) plans, and the ease of coordinated care through one plan. These may explain why enrollment in Medicare Advantage has grown rapidly over the last decade and now comprises nearly half (48%) of the eligible Medicare population.
While Medicare Advantage offers more to enrollees than traditional Medicare, however, a closer look reveals a more nuanced comparison between the two. Medicare Advantage plans typically require that enrollees use in-network providers, or else pay more for out-of-network care, an important factor for enrollees who need to see different specialists or providers outside of their network. In contrast, traditional Medicare enrollees have access to essentially all providers nationwide. Second, Medicare Advantage plans rely on utilization management techniques like prior authorization or step therapy to mitigate costs, but these tools can result in delayed or blocked access to necessary care that would have otherwise been approved by traditional Medicare.
Moreover, Medicare Advantage was intended to save the federal government money through payment via capitation, in which Medicare pays a flat amount based on the expected costs of providing these benefits and with risk adjustments based on the health status of enrollees. Despite this, Medicare Advantage spending per enrollee is higher than spending per person in traditional Medicare, adding up to about $7 billion in additional spending in 2019.
This extra spending puts a greater strain on the federal budget, demanding that Medicare Advantage be more closely observed to find efficiency errors and solutions to make the program sustainable. With the current projected Medicare insolvency date set in 2028, we must fill these gaps in knowledge to understand how Medicare Advantage works for enrollees while evaluating ways to minimize the money we spend on it. It is irresponsible for us to look past overspending without evaluating outcomes, as burdening the federal budget with more debt is not economically responsible and reaching insolvency could potentially lead to calls to eliminate programs like Medicare altogether, which would leave millions of people vulnerable to health and financial burdens.
I have been involved in two projects this summer that begin evaluating the Medicare Advantage program. Some of the costs of Medicare Advantage are attributable to the supplemental benefits it provides, so I examined the scope of those benefits, as there is currently no data assessing it. I gathered this data on 20 illustrative plans to understand how actual enrollees experience the advertised benefits, as well as the barriers enrollees might face when attempting to utilize them.
My second project involved researching what type of post-employment health insurance states offer their Medicare-eligible state retirees. Private employers that provide retiree benefits more often choose Medicare Advantage plans for Medicare-eligible retirees. I researched the current landscape of state public sector retiree benefits to see if it matches private employers. Hopefully, tracking these changes over time will trigger interest in employers’ fiscal motivations for these choices.
The work I’ve done at KFF has shown me that it is important to question the institutions and systems we have inherited to continue finding ways to improve the efficiency and quality of our social insurance systems. Medicare Advantage’s continued appeal for so many Medicare-eligible enrollees raises several such questions:
- Should we reevaluate the payment structure to minimize additional spending on Medicare Advantage and retain more for traditional Medicare?
- Is federal overspending responsible for private insurers’ continued interest in running Medicare Advantage plans?
- Are benefits meeting enrollee expectations, and should Medicare Advantage’s benefits and payment systems be adopted by traditional Medicare?
I hope that my research has helped spur interest in finding answers to questions like these, which can guide future improvements to traditional Medicare’s current structure. It is up to us, today, to make decisions that will support Medicare to do what it was intended to – to provide health coverage, justice, and security for a vulnerable population in a fiscally sustainable way, now and for many years to come.
Ciannah Correa is pursuing a Master of Public Health degree in health policy and management at the Emory University Rollins School of Public Health. Once a pre-med student, Ciannah has turned her attention to the intersections of economics and policy and their impact on health outcomes. Ciannah worked with Senior Vice President, Tricia Neuman and Senior Policy Analyst with KFF’s Program on Medicare Policy, Meredith Freed to research supplemental benefits of Medicare Advantage plans and state health coverage for retirees.