The Impact of the ACA on Medicare Advantage

The ACA cuts more than $200 billion from the Medicare Advantage program ($136 billion directly and another $70 billion indirectly) which will result in seniors facing higher premiums; a reduction in additional benefits; fewer health care choices; and higher out-of-pocket costs as well.

New CBO Projections:

CBO released its March 2011 Baseline last week. The following are projections showing the impact of the ACA on Medicare Advantage:

  • CBO is projecting MA enrollment declines from 11.7 million enrollees in 2011 to 7.5 million in 2018 and 7.8 million in 2019.
  • CBO is projecting MA enrollment as a percentage of total MA enrollment decreases from 24% today to 13% in 2019.

Studies Show MA Plans Are Providing Better Value for Beneficiaries:

Excerpts from AHIP’s Testimony to the House Ways & Means Committee

  • “Over the past 18 months, AHIP’s Center for Policy and Research has conducted a series of increasingly expansive studies comparing certain utilization measures, including hospital readmission rates, for enrollees in the Medicare Advantage program and the Medicare FFS program.”
  • “Recognizing that reducing preventable hospital admissions has become an important national priority, and a goal of the ACA, for achieving both quality improvement and cost control, health plans have developed a variety of innovative programs that are revitalizing primary care, improving care transitions, and helping patients achieve better health outcomes. Our research findings demonstrate that these strategies are succeeding in helping to keep patients out of the hospital and avoid potentially harmful complications.”
  • “Based on a risk-adjusted comparison of patterns of care among patients enrolled in two large, multi-state Medicare Advantage HMO plans and in the Medicare FFS program, we found that the Medicare Advantage plans improved health care for their enrollees by reducing emergency room visits by 24 percent, reducing hospital readmissions by 39 percent, reducing certain potentially avoidable hospital admissions by 10 percent, and reducing inpatient hospital days by 20 percent.”
  • “Based on an analysis of hospital discharge datasets in nine states, we found that risk-adjusted hospital readmission rates were about 27-29 percent lower in Medicare Advantage than in Medicare FFS for each enrollee, 16-18 percent lower for each person with an admission, and 14-17 percent lower for each hospitalization.”
  • “All of these studies consistently show that Medicare Advantage plans are reducing the need for preventable hospitalizations. As a result of this success, health insurance plans not only are improving the health and well-being of their enrollees, but also achieving greater efficiencies and cost savings for the Medicare program and for taxpayers.”

Heritage Foundation Study Looks at the Impact of the ACA on MA Beneficiaries:

  • “The Patient Protection and Affordable Care Act substantially alters Medicare Advantage and, as a consequence, reduces the access of senior citizens and the disabled to quality health care by restricting and worsening the health care plan options available to them.
  • “About three-fourths of the cuts will hit those with incomes of less than $32,400 per year in today’s dollars.”
  • “The loss of benefits will also vary widely by geography, with beneficiaries in the hardest-hit counties facing cuts almost five times as large as cuts for residents in the least-hit counties. In every county, the average beneficiary will lose at least 15 percent of his or her benefits.”
  • “According to the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS), by 2017, when the changes are fully phased in, 14.8 million senior citizens and disabled Americans who would have had Medicare Advantage benefits under the previous law will be denied coverage for many services and incur higher out-of-pocket costs. About half will lose Medicare Advantage coverage entirely. Others will stay in Medicare Advantage, but at reduced benefit levels and possibly in different plans that do not meet their needs as well.”
  • “…half of those who would have chosen MA under prior law either will be unable to enroll in MA plans at all or will no longer find it attractive to do so.”
  • “…instead of reducing waste, the MA cuts will simply cut health care services available to patients and transfer spending from Medicare Advantage to other federal programs and other payers (including patients), thus increasing federal and state spending on Medicaid and patient spending on Part D, supplemental care plans, and out-of-pocket costs.”
  • “By 2017, Medicare beneficiaries who would have enrolled in Medicare Advantage under prior law will lose an average of $1,841 due to the MA changes alone and $3,714 when the effects of the entire bill, including the FFS cuts, are considered.”
  • The effects of the PPACA on Medicare Advantage enrollees will be dramatic and negative. The most obvious effects will be:
    • Reductions in health care services delivered.
    • Worse and fewer options for seniors and the disabled.
    • Fragmentation of care.
    • Disproportionate harm to low-income and minority beneficiaries.
    • Higher state and federal Medicaid costs.
    • Higher prescription drug spending.
AHIP Studies: 
  • Low-Income & Minority Beneficiaries in Medicare Advantage Plans, 2008
  • Using AHRQ’s ‘Revisit’ Data to Estimate 30-Day Readmission Rates in Medicare Advantage and the Traditional Fee-for-Service Program (Full Report)
  • Innovations in Reducing Preventable Hospital Admissions, Readmissions, and Emergency Room Use (Full Report; Highlights)
  • Working Paper: Comparisons of Utilization in Two Large Multi-State Medicare Advantage HMOs and Medicare Fee-for-Service in the Same Service Areas (Full Report; Slide)
  • Reductions in Hospital Days, Re-Admissions, and Potentially Avoidable Admissions Among Medicare Advantage Enrollees in California and Nevada, 2006 (Full Report; Slides)
Other Studies:

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