Medicare Advantage: The Case for Protecting Patient Choice

Robert E. Moffit, Ph.D.  Medicare Advantage: The Case for Protecting Patient Choice. Heritage Foundation WebMemo #1836. March 6, 2008.

“the estimated 4 percent profit margins of Medicare Advantage plans are considerably below the profit margins for most major industries.”

“officials at the CMS estimate that Medicare beneficiaries are, on average, getting additional benefits in the program worth more than $90 per month, or $1,100 per year.”

“Empirical analysis shows that low-income and minority beneficiaries have disproportionately enrolled in Medicare Advantage plans, taking advantage of the lower cost-sharing and richer benefits.”

Addressing Geographic Variations: New Payment Approach In Medicare Advantage

Robert A. Berenson. From Politics To Policy: A New Payment Approach In Medicare Advantage
Health Affairs Web Exclusive, March 4, 2008.

While the Medicare Advantage program’s future remains contentious politically, the Medicare Payment Advisory Commission’s (MedPAC’s) recommended policy of financial neutrality at the local level between private plans and traditional Medicare ignores local market dynamics in important ways. An analysis correlating plan bids against traditional Medicare’s local spending levels likely would provide an alternative method of setting benchmarks, by producing a blend of local and national rates. A result would be that the rural and lower-cost urban “floor counties” would have benchmarks below currently inflated levels but above what financial neutrality at the local level–MedPAC’s approach–would produce.  Full text

Financing Medicare: An Issue Brief

Lisa Potetz, Health Policy Alternatives, Inc.

Financing Medicare: An Issue Brief

Kaiser Family Foundation, Publication #7731, January 2008

This issue brief provides an overview of Medicare’s financing and the fiscal challenges the program faces in the coming decades. The brief describes how Medicare is financed and examines several methods of assessing its long-term financial outlook. This brief also describes potential changes in the Medicare program that could arise if current trends continue and the potential for various policy proposals to change the trend lines, both for Medicare and for the nation’s overall health care spending. Other contributing factors include the nation’s aging population, the recently added Medicare drug benefit and growing enrollment in private Medicare Advantage plans.

The brief was prepared for the Kaiser Family Foundation by Health Policy Alternatives Inc.  Full report (pdf)

A Medicare Reform Proposal Everyone Can Love: Finding Common Ground among Medicare Reformers

Medicare reform will soon be front and center in the public policy arena.  The reason:  Projections in the past two years for Medicare’s deteriorating finances have triggered a legal requirement for the President to propose reform legislation within 15 days of the release of the next federal budget.  Congress must consider the president’s proposal on an expedited basis. Andrew J. Rettenmaier and Thomas R. Saving have written a reform proposal released by the National Center for Policy Analysis. This paper purposes a comprehensive reform that addresses both Medicare’s funding and its spending.

The authors propose to create Health Insurance Retirement Accounts (HIRAs) to allow workers to partially prepay their future medical costs and thereby reduce the projected tax burden on future workers. Under this plan, workers age 64 and younger in 2007 would contribute 4% of their total earnings into the accounts, in addition to the taxes needed to pay benefits for current retirees. After age 65, beneficiaries would use their HIRA balances to purchase an annuity. Under reasonable assumptions, average-income workers entering the labor market today will have annuities that would pay an amount equal to 29% to 59% of their projected spending on Medicare covered services at the midpoint of their retirement years. This reform proposal should appeal to reformers across the political spectrum because it reduces the tax burden on future workers, puts Medicare on a sounder footing, retains the progressivity of the current program’s funding, and produces cost sharing incentives that rise with lifetime income. Full report (html).