• Lessons from Medicare Advantage

    In an ungated NEJM Perspectives piece worth a full read, Marsha Gold summarizes the lessons from Medicare Advantage:

    • Neither the private sector (Medicare Advantage) nor government (traditional Medicare) has a magic solution for controlling health care costs.
    • Studies comparing Medicare Advantage plans with traditional Medicare in terms of quality of care are limited, but their results do not justify a large differential in payment based on quality.
    • Medicare Advantage has increasingly attracted beneficiaries who seek to lower supplemental premiums, limit cost sharing, and consolidate their benefits, but cost sharing in the program can still be substantial.
    • The highly skewed distribution of health care spending and the selection patterns of Medicare Advantage enrollees have meant that risk-adjusted payments are essential to an equitable private-plan offering.
    • In the absence of strong oversight, Medicare beneficiaries are vulnerable to unscrupulous insurers who may use questionable marketing practices and offer products that may not meet expected performance standards.

    It’s interesting to observe the extent to which these lessons are applied in premium support proposals or recognized by those promoting them. I hate to say it, but I detect some disconnect between researchers and policymakers on this front.

    UPDATE: The other just-released NEJM Perspectives piece on Medicare Advantage, by Jeet Guram and Robert Moffit, includes a nice summary of how the plans are paid, as well as a defense of the program.

    AF

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    • “Neither the private sector (Medicare Advantage) nor government (traditional Medicare) has a magic solution for controlling health care costs. “
      This is a little confusing here. Isn’t it true that Medicare HMOs’ medical loss ratio is low, meaning they spent less amount of money on direct patient care and quality improvement? So while their total cost may be higher than traditional Medicare, which is probably due to high administrative cost and huge profit, it sems to me Medicare HMOs do know how to cut health care and health care cost. Aren’t they already doing it?

    • Are they actually controlling costs (hard) or cherry picking (easy)?