The Truth About Medicare Advantage

About half of seniors use a program that is under Democratic assault

WSJ editorial. Excerpts:

"Congress created Medicare Advantage in 1997 with the goal of using market competition to improve care for seniors and restrain spending. CMS makes payments to insurers based on what it estimates the traditional fee-for-service would spend to cover the same seniors.

Payments are adjusted for medical risk factors, so insurers are paid more to cover sicker beneficiaries. This is intended to prevent plans that discourage seniors with costly medical conditions from enrolling. Insurers use savings from reducing waste to lower patient costs and offer supplemental benefits like dental and vision care. Democrats claim insurers are reaping outsize profits, but their margins are capped by law. Insurers increase profits by offering better benefits and lower costs and expanding market share."

"Advantage plans also have out-of-pocket spending caps."

"Advantage’s share of spending is commensurate with its share of beneficiaries"

"Advantage enrollees are less likely to report themselves as in “excellent” or “very good” health than those in fee-for-service."

"much more likely to be low-income"

"the plans are able to provide more benefits at less cost than traditional Medicare . . . because insurers do a better job of managing costs" 

"CMS has also flagged fraud in traditional Medicare hospice care and purchases of medical equipment"

"Only 7% of Advantage medical claims require prior authorization, and 98% of them are approved"

"the far bigger problem is overbilling by providers"

"a 10 percentage-point increase in Advantage enrollment in a county is associated with $146 to $194 less in Medicare spending per capita"

"overall Medicare spending last decade totalled $431 billion less than the Congressional Budget Office projected in 2010, even as the share of beneficiaries in Advantage increased by half"