Reforms to Medicare Advantage Can Enhance Quality of Health Care Coverage for Seniors

Current payment rules prevent seniors from enjoying full benefits of Medicare Advantage plans

NEW YORK, NY – As most Americans remain dissatisfied with health care costs and a new Congress gets underway, politicians have turned up the debate on new and old ideas for health care reform. Among those vulnerable to rising costs are 60 million elderly and disabled Americans, often on a fixed income, who receive health care coverage through Medicare. In a new report, Manhattan Institute Senior Fellow Chris Pope surveys the academic research and finds Medicare Advantage plans—Medicare coverage offered by private insurers—provide consistently better medical care at lower costs than Medicare’s traditional fee-for-service plans. According to Pope, Medicare Advantage plans can be structured to encourage patients to use more cost-effective sites of care and preventive services that reduce costly hospitalizations. The resulting savings can then be used to reduce out-of-pocket costs or to fund additional benefits, such as dental coverage, which are traditionally not covered by Medicare.

“Some argue that the benefits of Medicare Advantage are being captured by insurers, rather than being passed on to seniors,” said Pope. “But this is just the result of poorly designed payment rules.”

Pope argues that a few budget-neutral reforms could enhance Medicare benefits and reduce out-of-pocket costs for seniors, without adding to the burden of taxpayers.

Key findings of the report include:

• Medicare Advantage plans must cover at least the same health-care services as traditional Medicare plans, but do so consistently at a lower cost.
• By paying health-care plans in advance, Medicare Advantage provides an incentive for them to develop innovative care arrangements that keep seniors healthy.
• The regulations under which Medicare Advantage plans operate can be restructured so that more of the efficiency gains can be passed on to seniors.

Click here to read the full report.