There is a lot of cheering about the fact that payments to HMOs under the Medicare Advantage program were cut to temporarily stave off an 10 percent cut in Medicare fees to doctors.
A few things:
First, the cut was inflated by those want to kill MA because it was a departure from the government run Medicare program. By pitting doctors against the HMOs it achieved what pitting kids against HMOs didn't do in expanding SCHIP since, as most people have forgotten, the MA payments were going to fund health insurance for kids. So much for the Hobbesian choice.
Second, these cuts will hurt seniors directly and soon. HMOs had to use the extra payments to bring in the sicker and more chronically ill patients and get them healthier...which is what health care is supposed to do. They did so with lower premiums, more care and better disease management. As Mark McClellan noted in Congressional testimony;
Overall, compared to fee-for-service Medicare, beneficiaries in Medicare Advantage plans have much lower out-of-pocket costs; they receive significantly more preventive benefits, drug coverage, and services to help them better manage their chronic diseases; they have very high satisfaction rates; and in most cases, their overall care costs (Medicare plus beneficiary) are lower.
For example, Medicare Advantage beneficiaries
For example, Medicare Advantage beneficiaries receive preventive services like mammograms, colorectal cancer screening, prostate screening, and immunizations at significantly higher rates than beneficiaries in traditional fee-for-service (FFS) Medicare.
In addition, compared to other Medicare beneficiaries without supplemental “Medigap” coverage, MA beneficiaries are only one-third as likely (6 percent versus 17 percent) to report delaying the use of needed care due to cost.1
MA beneficiaries also receive higher quality of care in many areas; for example, a study in the Journal of the American Medical Association found that beneficiaries in MA plans received higher quality of care than beneficiaries in traditional FFS Medicare in five of seven HEDIS quality measures studied.2 Quality is reflected in overall high beneficiary satisfaction rates with their coverage: Consumer Assessment of Health Plans Surveys (CAHPS) generally rate MA plans highest among a range of types of health plans.3
These quality of care results are the consequence of how most MA plans provide coverage. Plans receive a single, risk-adjusted payment from Medicare, and they compete to attract and keep beneficiaries by using this subsidy to provide the most attractive benefits at the lowest overall cost. In contrast, in traditional FFS Medicare, benefits are determined by statute and cannot easily include many innovative approaches to benefit design, provider payment, care coordination services, and personalized support for beneficiaries. Through MA plans, beneficiaries across the country have access to plans with lower or zero copays for preventive services; they have widespread acces to wellness programs; they have access to dental and vision services that not only reduce costs but also help beneficiaries live better and improve their overall health.
Importantly, MA plans are also providing drug coverage that is more extensive and much less costly than in traditional FFS Medicare. This difference in generosity and cost, which increased between 2006 and 2007 and may continue to increase in the future, is likely the result of several factors. First, most MA plans can manage the use of prescription drugs more effectively, as part of their efforts to support the overall coordination of care for a patient’s health. Second, higher compliance with drugs has been shown to reduce other health care costs,4 and because MA plans have incentives to keep overall costs down that do not exist in traditional FFS, they can capture the savings in hospital, physician, and other costs from the greater compliance that comes with more comprehensive drug coverage. Again, this is a more efficient approach to health care coverage.
Finally, most MA plans provide much more support for patients with chronic diseases than is available in traditional FFS Medicare. This is critically important, since the vast majority of costs in Medicare – and most of the cost growth in Medicare – relates to treating the complications of a limited number of serious chronic diseases. Our health care system has huge and persisting quality gaps in the prevention and treatment of chronic diseases. There is no population in this country that needs such personalized services to improve coordination and prevent complications from chronic diseases more than Medicare beneficiaries.
All of these features – better preventive care, lower out-of-pocket costs, better drug coverage, better support for quality care for chronic diseases – are signs of more efficient health care. Not surprisingly, they add up to very large savings for beneficiaries – on average, out-of-pocket costs are $86 a month less in MA, compared to traditional FFS. Medicare with Medigap (counting beneficiary premiums) or no supplemental coverage. That’s more than $1000 a year in savings. This is why a recent analysis by Adam Atherly and Ken Thorpe of Emory University concluded that even though MA payments increase Medicare costs, “the size of the increase in costs will be less than the value of the supplemental benefits provided to beneficiaries” – that is, overall costs to beneficiaries and the Federal government are lower in the MA plans.5 (Similarly, according to MedPAC testimony before the Ways and Means Committee in May, average bids across all Medicare Advantage plans for Part A and B services are lower than the average cost of traditional FFS Medicare6 - and when Part D benefits are included, the cost differences are larger.)
Now all this value in health care will dry up. Republicans -- at least those that voted against robbing seniors of better care to finance a short term extortion of doctors who are already being screwed by Medicare -- should make this a campaign issue.
Do we really want our health care decisions to be run from Washington?
A few things:
First, the cut was inflated by those want to kill MA because it was a departure from the government run Medicare program. By pitting doctors against the HMOs it achieved what pitting kids against HMOs didn't do in expanding SCHIP since, as most people have forgotten, the MA payments were going to fund health insurance for kids. So much for the Hobbesian choice.
Second, these cuts will hurt seniors directly and soon. HMOs had to use the extra payments to bring in the sicker and more chronically ill patients and get them healthier...which is what health care is supposed to do. They did so with lower premiums, more care and better disease management. As Mark McClellan noted in Congressional testimony;
Overall, compared to fee-for-service Medicare, beneficiaries in Medicare Advantage plans have much lower out-of-pocket costs; they receive significantly more preventive benefits, drug coverage, and services to help them better manage their chronic diseases; they have very high satisfaction rates; and in most cases, their overall care costs (Medicare plus beneficiary) are lower.
For example, Medicare Advantage beneficiaries
For example, Medicare Advantage beneficiaries receive preventive services like mammograms, colorectal cancer screening, prostate screening, and immunizations at significantly higher rates than beneficiaries in traditional fee-for-service (FFS) Medicare.
In addition, compared to other Medicare beneficiaries without supplemental “Medigap” coverage, MA beneficiaries are only one-third as likely (6 percent versus 17 percent) to report delaying the use of needed care due to cost.1
MA beneficiaries also receive higher quality of care in many areas; for example, a study in the Journal of the American Medical Association found that beneficiaries in MA plans received higher quality of care than beneficiaries in traditional FFS Medicare in five of seven HEDIS quality measures studied.2 Quality is reflected in overall high beneficiary satisfaction rates with their coverage: Consumer Assessment of Health Plans Surveys (CAHPS) generally rate MA plans highest among a range of types of health plans.3
These quality of care results are the consequence of how most MA plans provide coverage. Plans receive a single, risk-adjusted payment from Medicare, and they compete to attract and keep beneficiaries by using this subsidy to provide the most attractive benefits at the lowest overall cost. In contrast, in traditional FFS Medicare, benefits are determined by statute and cannot easily include many innovative approaches to benefit design, provider payment, care coordination services, and personalized support for beneficiaries. Through MA plans, beneficiaries across the country have access to plans with lower or zero copays for preventive services; they have widespread acces to wellness programs; they have access to dental and vision services that not only reduce costs but also help beneficiaries live better and improve their overall health.
Importantly, MA plans are also providing drug coverage that is more extensive and much less costly than in traditional FFS Medicare. This difference in generosity and cost, which increased between 2006 and 2007 and may continue to increase in the future, is likely the result of several factors. First, most MA plans can manage the use of prescription drugs more effectively, as part of their efforts to support the overall coordination of care for a patient’s health. Second, higher compliance with drugs has been shown to reduce other health care costs,4 and because MA plans have incentives to keep overall costs down that do not exist in traditional FFS, they can capture the savings in hospital, physician, and other costs from the greater compliance that comes with more comprehensive drug coverage. Again, this is a more efficient approach to health care coverage.
Finally, most MA plans provide much more support for patients with chronic diseases than is available in traditional FFS Medicare. This is critically important, since the vast majority of costs in Medicare – and most of the cost growth in Medicare – relates to treating the complications of a limited number of serious chronic diseases. Our health care system has huge and persisting quality gaps in the prevention and treatment of chronic diseases. There is no population in this country that needs such personalized services to improve coordination and prevent complications from chronic diseases more than Medicare beneficiaries.
All of these features – better preventive care, lower out-of-pocket costs, better drug coverage, better support for quality care for chronic diseases – are signs of more efficient health care. Not surprisingly, they add up to very large savings for beneficiaries – on average, out-of-pocket costs are $86 a month less in MA, compared to traditional FFS. Medicare with Medigap (counting beneficiary premiums) or no supplemental coverage. That’s more than $1000 a year in savings. This is why a recent analysis by Adam Atherly and Ken Thorpe of Emory University concluded that even though MA payments increase Medicare costs, “the size of the increase in costs will be less than the value of the supplemental benefits provided to beneficiaries” – that is, overall costs to beneficiaries and the Federal government are lower in the MA plans.5 (Similarly, according to MedPAC testimony before the Ways and Means Committee in May, average bids across all Medicare Advantage plans for Part A and B services are lower than the average cost of traditional FFS Medicare6 - and when Part D benefits are included, the cost differences are larger.)
Now all this value in health care will dry up. Republicans -- at least those that voted against robbing seniors of better care to finance a short term extortion of doctors who are already being screwed by Medicare -- should make this a campaign issue.
Do we really want our health care decisions to be run from Washington?
