The Truth about Medicare Advantage

I spent a few hours this weekend at the Sullivan County Fair in Forksville (pop. 147), talking with folks about the new health care law. Congressman Chris Carney spent most of the afternoon there, walking around with his family and talking with constituents. He still faces a lot of criticism for his "yes" vote on health care reform, and there'sa lot of misinformation (and disinformation) out there, especially in rural areas like Sullivan County.

One current topic of concern for a lot of people is Medicare Advantage, because opponents of reform have been spreading the word that health care reform is killing Medicare Advantage. The truth is that it's the insurance companies who are doing this on their own, dropping plans, raising rates, or lowering benefits. Insurance companies are choosing excess profits and high CEO salaries over serving their consumers. The health care law does NOTHING to kill or hurt Medicare Advantage.

One of the biggest reasons people sign up for Medicare Advantage is that it gives them free preventive care. Well, guess what? Free preventive care is now part of traditional Medicare. Under the new law, seniors will now be able to get a free annual check-up every year (before, they just got one check up, when they first signed up for Medicare), and free diagnostic tests like mammograms and colonoscopies. So there's no longer much advantage to Medicare Advantage. And some Medicare Advantage plans took care of the Part D "donut hole" for prescription drugs, but the new law does away with the donut hole gradually until it's totally eliminated by 2020. Next year, seniors will get 50% off on prescription drugs, but the cost of the drugs will be credited 100% toward getting them out of the donut hole.  (For those unfamiliar with the donut hole, see the new health care law and the donut hole.)

This is one case in the health care reform debate where it's important to know a little history, Medicare Advantage came into being when Congress overhauled Medicare in 2003, most notably introducing Medicare Part D prescription drug program. The insurance companies told Congress: "We can offer more services than traditional Medicare and do it more efficiently, but we just need a little subsidy for a few years and then we'll be able to do it on our own." So Congress went along and gave the companies nice subsidies to start up Medicare Advantage programs, with the result that traditional Medicare was subsidizing Medicare Advantage plans to the tune of about $1,000 per person. According to the 2003 law, those subsidies were designed to phase out starting in 2010. The insurance lobby asked for the subsidies to be extended, but Congress said "No, you made a deal, you said you could do it on your own," and the 2003 law's original provisions stayed in effect.

In PA, our so-called non-profit Blues (like Blue Cross of NEPA, Capitol Blue Cross, and Highmark) have $5.6 billion in surplus reserves, yet they need subsidies? The real reason they're dropping these plans is that there won't be much call for them pretty soon.  Once consumers learn more about the new law, they'll see that the advantage is gone, and Medicare Advantage isn't worth the extra cost.

For more information, see AARP's answers on Medicare Advantage.