It’s no secret that the Obama administration is no fan of the Medicare Advantage program and would like to see cuts to the program. The president has stated publicly that he believes that a senior’s health is no better off because of Advantage Plans and the money could be better spent giving Americans access to preventative care.
A study published in the American Journal of Managed Care (AJMC) demonstrates that hospital re-admissions are 22% lower for members of a Medicare Advantage Plan than for people who are enrolled in Fee-for-Service original Medicare.
This study is based on hard data and not on the opinion of an elected official trying to further an agenda.
Medicare Advantage cuts – on again off again
CMS had proposed cutting reimbursements to plan providers by 2.3% for 2014. But a fierce lobbying effort resulted in a reversal of that decision and instead a 3.3% increase is to be put into place.
But don’t get all fat and happy… cuts to Medicare Advantage are just around the corner. The Health Care Reform law is to slowly cut Medicare Advantage funding by $150 billion over the next 10 years.
Approximately 25% of the 47 million beneficiaries rely on Advantage plans to get their health care. And while reform is designed to drive people back to original Medicare, there’s a reason people choose an Advantage plan over original Medicare or Medicare plus a Medicare supplement in the first place.
Medicare Advantage vs Original Medicare
There are two main reasons you may wish to enroll in a Medicare Advantage Plan rather than sticking with original Medicare. The first is the predictable costs associated with Advantage Plans and the second is the added benefits.
For many people the hospital deductible required when getting your benefits from original Medicare is wholly unaffordable. And given the requirement to pay 20% for all covered outpatient procedures, many people fear how that unknown amount can add up. And there is no maximum out-of-pocket with original Medicare!
Even if you have to pay a small premium for your Medicare Advantage Plan, you at least have a better idea as to what your potential costs will be. Many plans have smaller fixed amounts due for hospital stays and those amounts are for a limited number of days.
Additionally, it’s much easier to budget when you know ahead of time how much a x-ray or MRI may cost, for example. And Advantage Plans have a maximum out-of-pocket (MOOP) amount so you are always aware of your worst case scenario.
Let’s face it, Medicare doesn’t cover a lot services that older adults require; like hearing aids, dentures, vision and eye ware, etc. . Advantage Plans often include many of these extras and this is a big reason why plans are so popular.
Having Part D included in a plan both simplifies things and often saves money on premiums.
Medicare Advantage vs Original Medicare + Medigap
A Medigap policy is a great addition to original Medicare if you can afford it. If you choose a comprehensive policy like Medicare Supplement Plan F you have only a premium to pay and your Medicare-covered expenses are taken care of.
But premiums are often out of reach for many and if you don’t enroll at the right time, you may not qualify as medical underwriting is often required.
Cuts to Medicare Advantage are a bad idea
The reasons why Medicare Advantage is so popular are the reasons why the program shouldn’t be cut. And before you tell me I’m out of touch with the realities of budgets and funding, I am aware of financial realities.
I know that somebody has to pay for benefits programs, I’m just not sure that we have to punish those who have paid in to the system so we can subsidize younger people’s health insurance costs even if they earn as much as 4 times the poverty level! That’s a subsidy for individuals earning $45,960 or $94,200 for a family of four!
I personally have friends and neighbors who are enrolled in Medicare Advantage Plans who earn a fraction of those amounts.
Please leave me a comment below to let me know what you think.