Vice President for Health Policy
I noted yesterday that health reform scales back overpayments to private Medicare Advantage plans, thereby lowering premiums for all Medicare beneficiaries and extending the solvency of Medicare’s trust fund. Insurers, arguing that curbing the overpayments results in direct benefit cuts for enrollees, often imply that they have used the overpayments solely to provide increased benefits. But findings from a recent National Bureau of Economic Research study challenge this argument.
The study examined certain urban counties in which Medicare Advantage plans received substantial overpayments in the four years before health reform started phasing down the overpayments in 2012. Here’s what it found:
Despite insurers’ “doom and gloom” warnings that health reform will devastate the program by scaling back the overpayments, Medicare Advantage continues to thrive. Insurers can still provide additional benefits to attract enrollees by trimming profits and becoming more efficient.
That’s likely why the Congressional Budget Office expects Medicare Advantage enrollment to continue to grow through 2019 and why Wall Street analysts also still have a “positive long-term view of Medicare Advantage.”