How Medicare Advantage program is breaking records

By Robert E. Moffit

Medicare Advantage, a program of competing private health plans for Medicare beneficiaries, is breaking records for enrollment, health plan choice and competition, and cost savings for America’s senior and disabled citizens. Naturally, self-styled congressional “progressives” intend to abolish it.

Created in 2003, the Medicare Advantage was designed as an alternative to the traditional Medicare program. MA’s private health plans offer comprehensive health benefits, including vision and hearing services, as well as affordable drug coverage and protection from the financial devastation of catastrophic illness.

Traditional Medicare, by contrast, has crucial gaps in coverage for medical benefits and services, notably the absence of catastrophic protection and prescription drug coverage. Seniors enrolled in traditional Medicare must therefore buy added coverage to secure these vital benefits.

Benefits and services in traditional Medicare and MA are financed very differently. Traditional Medicare uses a 1960s-style defined-benefit program where physicians and other medical professionals are paid on a fee-for service basis and subject to government price controls.

Medicare Advantage is financed on a defined-contribution basis, making a per capita contribution on behalf of beneficiaries to the health plan of their choice. Consumer choice and private health plan competition drive the program.

Medicare Advantage plans also receive help from the government’s flexible regulatory regime. This enables the plans to vary their benefit offerings in response to Medicare beneficiaries’ changing wants and needs.

Medicare Advantage is succeeding well beyond official expectations. Though MA has been steadily improving since its start in 2003, the Trump administration’s management of the program, focused laser-like on regulatory flexibility, has not only expanded seniors’ health plan choices and health benefit options, it has also controlled seniors’ costs.

Seniors are voting with their feet. Today, Medicare Advantage enrolls more than 24 million Medicare beneficiaries, or more than one third of the total Medicare population. For 2021, the Center for Medicare and Medicaid Services projects that 26.9 million beneficiaries will enroll in the program, or about 42% of all Medicare beneficiaries. Since 2017, when the Trump administration took over program management, there has been a 44% increase in MA enrollment.

At the same time, seniors’ health plan choices will sharply increase in 2021. Today, senior and disabled citizens can choose on average from 39 private health plans; next year they will be able to choose from an estimated 47 health plans, including new plans in the nation’s rural counties.

As originally designed, MA plans’ varied benefit packages have always been more comprehensive than traditional Medicare’s defined benefits offerings for hospitalization, physicians and outpatient medical services.

For 2021, however, MA’s benefit offerings are going to be even richer and more varied. According to CMS, 94% of MA plans will offer telehealth benefits, reflecting the Trump administration’s commitment to expand these benefits during the pandemic.

Beyond that, more MA plans will offer palliative and hospice care, as well as a range of supplemental benefits, particularly for the chronically ill, including adult day care, caregiver support and transportation services.

Based on 2020 data, CMS reports continuing improvements in health plans’ quality metrics, particularly for MA plans that offer prescription drug coverage.

Rising health care costs, especially premiums and deductibles, are a major concern for all Americans, but especially retired citizens who are living on fixed incomes. Next year, the CMS also reports that seniors enrolled in the Medicare Advantage program can expect an 11% decrease in their average monthly health plan premium, and most do not pay any MA premium at all beyond the standard Part B premium required by all Medicare enrollees.

Since 2017, when the Trump administration undertook management of the program, average MA premiums decreased by an estimated 34.2%. Over the same period, Medicare beneficiaries have saved an estimated $3.4 billion in total premium costs for their Medicare Advantage and Part D drug coverage.

One might think that such a major health policy success would be worthy of widespread celebration.

No way.

Instead of celebration, congressional “progressives” response to MA’s success is its destruction. Most House Democrats, along with senior Senate Democrats (including Cory Booker of New Jersey, Richard Blumenthal of Connecticut and vice presidential candidate Kamala Harris) are sponsoring legislation that would abolish the Medicare Advantage plans, as well as virtually all other private and employment-based health plans. The Senate bill would create a government monopoly over health insurance and the House bill would give federal officials almost total control over Americans’ health care.

If they succeed, you would no longer have to concern yourself with your personal choice about the best health plan for you and your family. That will be none of your business. You will get what federal officials give you — whether you like it or not.

Those are the high stakes in America’s national health care debate.

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