By Sean Cavanaugh, Deputy Administrator and Director of the Center for Medicare
Medicare Advantage is yet another area where the promise of the Affordable Care Act – saving money and improving care – has been fulfilled. When Congress passed the landmark Affordable Care Act six years ago, some critics claimed the law had fatally undermined the Medicare Advantage program. Yet, each year since then, the Centers for Medicare & Medicaid Services (CMS) has reported data showing this doom and gloom scenario was wrong. In spending taxpayers’ and beneficiaries’ dollars more wisely, the Affordable Care Act’ reforms resulted in a rejuvenated Medicare Advantage program that has grown every year while premiums have been stable and quality has improved.
First, the Affordable Care Act stopped the systematic excessive payments to Medicare Advantage plans. Before the Affordable Care Act, Medicare Advantage plans were being paid 114 percent of Original Medicare costs on average. This translated into an extra $1,280 of spending per Medicare Advantage enrollee or $14 billion in higher aggregate payments in 2009. The Affordable Care Act gradually reduced these payments but offered Medicare Advantage plans an opportunity to earn additional funding by improving the care they provided to Medicare beneficiaries through the Quality Bonus Payment program.
Rather than resulting in the demise of Medicare Advantage, these changes sparked a resurgence in the program. Enrollment in Medicare Advantage has increased every year since the Affordable Care Act passed and next year is expected to reach an all-time high of about 18.5 million, a 60 percent increase from 2010. In 2017, one-third of all Medicare enrollees will be in a Medicare Advantage plan. And these beneficiaries are receiving better care. In 2009, only about 17 percent of Medicare beneficiaries were in four and five star plans; in 2016, over 70 percent are enrolled in four and five star plans.
Access to the Medicare Advantage program remains strong, with 99 percent of Medicare beneficiaries having access to a Medicare health plan, which has remained relatively constant since 2010. And in every county of the United States, seniors can choose to remain in Original Medicare.
This improved quality, increased enrollment, and stable plan availability has been accomplished while maintaining stable – or even lower Medicare Advantage premiums paid by enrollees. The average Medicare Advantage premium in 2017 is projected to be 13 percent lower than the average Medicare Advantage premium prior to passage of the Affordable Care Act. In 2017, Medicare estimates that the average Medicare Advantage monthly premium will decrease by 4 percent compared to 2016.
Other key improvements the law made to Medicare Advantage and the Part D prescription drug program are:
- Closing the Medicare Part D “donut hole” over time. Because of this improvement to the law, people with Medicare are seeing reduced costs through savings on both covered brand-name and generic drugs. Through July 2016, more than 11 million seniors and people with disabilities have received savings and discounts in the coverage gap of over $23.5 billion on prescription drugs, an average of $2,127 per beneficiary.
- Adding coverage of an annual wellness visit and eliminating coinsurance and the Part B deductible for certain recommended preventive services covered by Medicare, including many cancer screenings and other important benefits. Medicare Advantage plans are required to cover all services that Original Medicare provides. By making certain preventive services available with no cost sharing under Original Medicare, the Affordable Care Act removed barriers to prevention, helping Americans take charge of their own health and helping individuals and their providers better prevent illness, detect problems early when treatment works best, and monitor health conditions. CMS extended that zero-cost-sharing protection to enrollees in Medicare Advantage plans after passage of the Affordable Care Act.
- An estimated 39.2 million people with Medicare (including those enrolled in Medicare Advantage) took advantage of at least one preventive service with no copays or deductibles in 2015.
- Nearly 9 million Medicare beneficiaries (including those enrolled in Medicare Advantage) took advantage of an annual wellness visit in 2015.
- Requiring that all Medicare Advantage plans spend at least 85 percent of revenue on quality and care delivery and not on overhead, profit or administrative costs. This means that 85 cents of every dollar earned by Medicare Advantage plans must be used on quality and care delivery. Enrolled seniors and individuals with disabilities will get more value and better benefits as plans spend more on health care. This requirement keeps Medicare Advantage in line with private insurance.
As CMS works to further strengthen the Medicare Advantage and Part D prescription drug programs for current and future Medicare beneficiaries, the Affordable Care Act’s reforms have built a foundation that will continue to provide greater protections for beneficiaries and value for taxpayers.