CMA Health Policy Blog

Encore: More About the Costs of Private Medicare

May 4, 2009 at 6:01 pm Judith Stein Leave a comment

Once again we hear that private Medicare, euphemistically known as “Medicare Advantage,” costs billions of dollars more than the traditional public program. A report issued by the Commonwealth Fund on May 4th finds that the private plan model is draining Medicare and taxpayers – and providing little in exchange. This nonsense must end as soon as possible. Why, with all we always hear about Medicare fraud, do these outrageous subsidies continue?
And please, remind policy makers not to repeat this unaffordable waste in Health Care Reform!

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Medicare Advantage plans will receive $11.4 billion extra: report
By Rebecca Vesely
Posted: May 4, 2009 – 5:59 am EDT

Medicare Advantage plans this year will receive $11.4 billion in extra payments above the cost of traditional fee-for-service Medicare, a 34% increase over 2008, according to a report released by the Commonwealth Fund.

Since Medicare Advantage plans became available in 2004, the federal government has made $43 billion in supplemental payments to private health insurers administering these plans, according to the study by Brian Biles, professor of health policy at George Washington University, and colleagues. Extra payments this year averaged $1,138 per member, or 13% above Medicare fee-for-service costs, for the total 10 million Medicare Advantage members.
The 34% year-over-year increase was because of higher payment rates and increasing enrollment in Medicare Advantage plans, according to the study, which used Medicare and Commonwealth Fund data. “We have to ask ourselves whether this is the best use of our healthcare dollars,” Biles said in a written statement.
Visit modernhealthcare.com/reprints for additional information.

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