Why is Medicare Advantage doing so well in the face of budget cuts? Experts can’t wrap their heads around the phenomenon.
Since Congress approved $150 billion cuts to the program as part of the Patient Protection and Affordable Care Act in 2010, enrollment in Advantage plans has soared to 17 million, up from 11 million at the time of the bill’s passage.
The New York Times notes that the eagerness with which beneficiaries and insurers have approached Medicare Advantage in the face of cuts contrasts starkly with the wobbly existence of the PPACA individual marketplace, which has not enrolled nearly as many as expected and which some insurers have suggested is not profitable enough to participate in.
But even with reductions in reimbursements for Medicare beneficiaries, the health program for senior citizens is a far more profitable endeavor for major insurance companies.
They are still getting an average of $10,000 per beneficiary per year from the federal government.
While insurers participating in the PPACA marketplace have faced claims that exceed the revenue they get through premiums (paid by individuals and the federal government), those participating in Medicare Advantage are still enjoying healthy profit margins.