Medicare Advantage (MA) enrollment grew by an estimated 9% in 2022, according to an analysis by AXIOS news. This jump comes amidst mounting evidence that the MA system needs substantial reform and oversight and continues to cost the federal government considerably more than traditional Medicare.
MA is administered by private insurance companies and is an alternative to Original, fee-for-service Medicare. In recent years, insurers have flocked to MA, a signal that they see potential gains in the future. As a result, new and more plans are flooding the MA market. During the fall 2021 open enrollment period, the average Medicare beneficiary had access to 39 MA plans, more than double the number from 2017. This is likely increasing beneficiary confusion and leading to enrollment missteps.
Despite the hurdle of too many, and often very similar options, more and more beneficiaries are choosing MA. Many of the enrollment gains may be due to policy changes, financial realities, and extensive marketing that have made the plans appear more attractive. For example, MA plans may offer benefits that are not available through Original Medicare and must cap beneficiary costs for hospital and outpatient coverage. They are also free to engage in marketing, including through television ads that may not fully explain the trade-offs of choosing MA.
Some who choose to join MA may find the program is not well suited for their needs. For example, a federal watchdog has flagged widespread inappropriate denials of care from MA plans. And people with MA are more likely to face affordability problems than those with Original Medicare and supplemental coverage. Beneficiaries may also find that once they are in MA, their options are limited. The move from Original Medicare to MA can be done no matter how long the beneficiary has had Medicare coverage, but the move back to Original Medicare can be more difficult. Many states allow insurers that offer supplemental coverage to Original Medicare (Medigaps) to discriminate against people with pre-existing conditions unless beneficiaries are within their initial enrollment period.
This surge in enrollment is an expensive one for taxpayers. Although MA was supposed to save Medicare dollars, it hasn’t worked out that way. The Medicare Payment Advisory Commission (MedPAC) has found that Medicare spends more overall for enrollees in MA than for those in Original Medicare, and that “private plans have never yielded aggregate savings to Medicare,” belying arguments that a private option will bring down costs. Studies suggest these costs may be due, in part, to plan efforts to maximize profits. These behaviors can include designing benefits to attract healthier—less expensive—enrollees; exaggerating the health needs of enrollees to obtain higher payment from Medicare; and engaging in practices that cause people who are in their last year of life, and who often have very high health needs, to leave MA for Original Medicare.
While MA exists to give people with Medicare a choice in how they receive their coverage, MA plans must be held to a high standard to protect the lives and financial well-being of the beneficiaries they serve, and they should not be permitted to enrich their shareholders at the public’s expense. At Medicare Rights, we will continue to urge Congress and the administration to do more to rein in inappropriate behaviors by private plans, to level the playing field between MA and Original Medicare, and to eliminate MA overpayments.
If you wish to change your MA plan or move from MA to Original Medicare, you may do so until March 31: Medicare Advantage Open Enrollment Period.
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