Medicare Advantage: What’s the Deal?
Subsidies to private insurance companies under Medicare Advantage (MA), the privately run version of Medicare, would be scaled back under President Obama’s health care plan. (When he talks of “unwarranted subsidies in Medicare that go to insurance companies” he’s referring to MA.)
Health care journalist Maggie Maher, in 2008, reviewed the Republican-backed program on the Health Care Blog. By most accounts, this extremely costly initiative, which purports to offer “choice” and “savings,” is draining essential dollars away from traditional Medicare and is not always reducing out-of-pocket costs to beneficiaries. The U.S. Government Accountability Office generated much news when it reviewed MA in 2008 and found:
In 2006, the federal government spent about $59 billion on Medicare Advantage (MA) plans, an alternative to the original Medicare fee-for-service (FFS) program. Although health plans were originally envisioned in the 1980s as a potential source of Medicare savings, such plans have generally increased program spending. Payments to MA plans have been estimated to be 12 percent greater than what Medicare would have spent in 2006 had MA beneficiaries been enrolled in Medicare FFS. Some policymakers are concerned about the cost of the MA program and its contribution to overall spending on the Medicare program, which already faces serious long-term financial challenges.
PolitiFact.com has more on the president’s claim that eliminating this subsidy would save billions of dollars. The St. Petersburg Times service also fact checks last night’s speech.