Medicare Advantage: What Beneficiaries Should Expect Under the President’s Health Care Plan

Hearing Description:
The House Energy and Commerce Health Subcommittee questioned industry analysts to examine the state of the Medicare Advantage Program. The witnesses reported different findings in regards to the future of the program. Some felt it was on the path to continued success while others thought the spending cuts would cripple the program.

Hearing Date: December 4, 2013

Hearing Summary: Prepared for AAPS by the Market Institute

The Health subcommittee met to examine the Medicare Advantage plan and how people would be affected by the Affordable Care Act. Chairman Joe Pitts (R-Penn.) said in his opening statement that the Medicare actuary projected that payment cuts would result in an enrollment decrease in the MA program of as much as 50 percent. A recent report by Kaiser warned that more than half a million beneficiaries may have to switch to another MA plan or return to fee-for-service Medicare in 2014, as a direct result of the Affordable Care Act.

The first witness, Douglas Holtz-Eakin, President at American Action Forum testified in his opening statement that Medicare Advantage is a vital program that gives seniors needed options and provides value. The ACA was sold to Congress and the public with a promise that those who liked their coverage could keep it, but this turned out to be false and it is affecting those with Medicare Advantage. Those people living in rural areas that do not have access to supplemental insurance are getting negatively impacted. Future scheduled cuts will even do more damage.

The second witness, Joe Baker, President at Medicare Rights Center testified in his opening statement that The ACA included a set of policies designed to make the MA system more efficient and to enhance plan quality. Prior to the healthcare law, Medicare Advantage had way too many health coverage plans. There was too much overlap and redundancy and the ACA correct that by removing many plans. ACA savings secured largely from MA payment adjustments are producing positive returns for the Medicare program overall.

The third witness, Bob Margolis, CEO at Healthcare Partners testified in his opening statement that under Medicare Advantage, physician groups are reimbursed through population-based payment model that ultimately incentivizes care downstream to individual physicians. The system is designed to improve quality of care and address patient’s total care needs. Medicare Advantage enrollment has steadily grown over the past several years, mostly due to the results and care of the program. However, many cuts to the program put it at substantial risk. The net result is more seniors are pushed away from MA and head towards the FFS Medicare model. Efforts should be made by Congress to strengthen the Medicare Advantage program and not weaken it. It currently outperforms the Medicare Fee For Service model and improves outcomes for seniors.

The fourth witness, Marsha Gould, Senior Fellow at Mathematica Policy Research testified in her opening statement that she has been tracking the market dynamics of managed Medicare plans for 20+ years. The Medicare Advantage remains a strong option for our country’s seniors despite expected budget cuts. In a 2013 report to Congress, the Medicare Payment Advisory Committee concluded that the Affordable Care Act has improved the efficiency of the program and may have enhanced quality, all while increasing MA enrollment figures. Her independent research has reached the same conclusions as MedPAC: the payment changes under the ACA have actually helped Medicare Advantage.

The final witness, Jon Kaplan, Managing Director at Boston Consulting Group testified in his opening statement that his organization analyzed the differences in outcomes between patients with traditional Medicare and those with Medicare Advantage. The results concluded patients with Medicare Advantage had better outcomes.

In response to questioning, Douglas Holtz-Eakin said:

MA cuts will not be reinvested into Medicare, it will be used to support insurance subsidies and other ACA related implementations
Absent genuine reform, Medicare will fall under it’s own financial weight. 10,000 new beneficiaries are being added every day and there is a $300 billion gap between payroll taxes and Medicare funding
The net result due to the ACA will be less availability of MA coverage

In response to questioning, Joe Baker said: