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Analysts: Some private Medicare plans beat CMS

By Allison Bell

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Health policy specialists who say the federal government should reduce support for the Medicare Advantage program have published a paper that includes per-capita cost data.

Judy Feder of the Urban Institute and two colleagues have compared the performance of Medicare Advantage plans and traditional Medicare plans at the county level.

The Medicare Advantage program gives for-profit and nonprofit private health insurers a chance to provide plans that serve as an alternative to the traditional Medicare program.

Supporters of the program note that the Medicare Advantage plans often cut monthly premium payments and other out-of-pocket costs for enrollees sharply, and that the private plans often offer enrollees benefits, such as eyecare and hearing care benefits, that are not available from the traditional Medicare program.

Medicare Advantage program critics contend that the private plans can offer the rich benefits because they get rich subsidies that increase the cost of coverage for traditional program enrollees, and that, in some cases, the added Medicare Advantage benefits encourage unnecessary spending, by reducing co-payments, deductibles and other mechanisms that give consumers “skin in the game” and encourage them to seek only the amount of care that appears to be absolutely necessary.

Feder and colleagues looked the Centers for Medicare & Medicaid Services (CMS) Medicare program data for 2,878 counties and found that per-capita costs were lower for traditional Medicare program enrollees in about 74 of the counties.

Costs were about equal in 11 percent of the county, and costs were lower for Medicare Advantage enrollees in about 15 percent of the counties, Feder and her colleagues said.

Medicare Advantage plans seemed to do better at cutting costs in the counties where Medicare Advantage plans served the highest percentage of all Medicare program enrollees, the analysts said.

“That a higher penetration rate is associated with plan costs below Medicare’s is evidence that, in these counties, plans’ efficiency relative to traditional Medicare has indeed facilitated effective competition to enroll beneficiaries,” the analysts said.

In some counties, the per-capita cost figures may reflect differences in enrollee mix and other characteristics that skew the results in favor of the Medicare Advantage plans, the analysts said.

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