An Economic History of Medicare Part C

Abstract

Context Twenty-five years ago, private insurance plans were introduced into the Medicare program with the stated dual aims of (1) giving beneficiaries a choice of health insurance plans beyond the fee-for-service Medicare program and (2) transferring to the Medicare program the efficiencies and cost savings achieved by managed care in the private sector. Methods In this article we review the economic history of Medicare Part C, known today as Medicare Advantage, focusing on the impact of major changes in the program’s structure and of plan payment methods on trends in the availability of private plans, plan enrollment, and Medicare spending. Additionally, we compare the experience of Medicare Advantage and of employer-sponsored health insurance with managed care over the same time period. Findings Beneficiaries’ access to private plans has been inconsistent over the program’s history, with higher plan payments resulting in greater choice and enrollment and vice versa. But Medicare Advantage generally has cost more than the traditional Medicare program, an overpayment that has increased in recent years. Conclusions Major changes in Medicare Advantage’s payment rules are needed in order to simultaneously encourage the participation of private plan, the provision of high-quality care, and to save Medicare money.

Potential “Savings” of Medicare: The Analysis of Medicare Advantage and Accountable Care Organizations

“…They find that individuals who were forced out of Medicare Advantage plans and reenrolled in the traditional fee-for-service Original Medicare program saw sizable increases in hospital utilization that were not associated with any measurable reduction in hospital quality or patient mortality. McGuire et al (2011) review the economic history of Medicare Advantage and find that Medicare Advantage generally cost more than the traditional Medicare program. Newhouse and McGuire (2014) suggest that, on average, Medicare Advantage plans appear to offer higher value than the Original Medicare, and greater Medicare Advantage penetration appears to improve the performance of the Original Medicare.…”

Medicare reimbursement and orthopedic surgery: past, present, and future

“…The Balanced Budget Act (BBA) of 1997 created Part C or "Medicare + Choice" plans in an effort to further curb spending [28,29]. This law allowed Medicare beneficiaries to enroll in commercial health insurance plans, typically through health management organizations (HMO).…”

Making Medicare Advantage a Middle-Class Program

“…Research and policy have focused on the "risk adjustment" of Medicare payments to pay more for the sick and less for the healthy joining the MA plans. 2 In spite of improvements in risk adjustment technology and many other policy reforms, Part C has yet, however, to save Medicare money (McGuire, Newhouse and Sinaiko, 2011). As part of the Affordable Care Act (ACA), Medicare payments to MA plans are being cut, and, based on experience, plan and beneficiary exit will follow; 3 but, based on the same experience, these cuts are unlikely to move the MA program into the black for Medicare.…”