After failing to give Medicare the power to “negotiate” drug prices under Part D some in Congress have now decided they will save money by lowering payments to private sector Medicare Advantage Plans. Around 18% of beneficiaries are enrolled in these plans nationwide. These plans bid for enrollees against a “benchmark” established by average fee for service expenditures in a geographic area. If the bid is higher than the benchmark the beneficiary pays the difference. If it is lower 75% of the difference is returned to the beneficiary in additional services, reduced cost sharing and/or reduced Part B and Part D premiums. Medicare retains the remaining 25% in cost savings. Consumer choice and real prices, a first for Medicare.

Congress has decided the benchmarks have been set too high and argue that traditional fee for service Medicare (a true 1960’s junker) costs 12% less than Advantage Plans. So they want to “equalize” the expenditures for both. Unfortunately, they are not comparing equivalent plans. Advantage coverage fills in the numerous deductible and coverage holes that exist in traditional Medicare and also provide drug coverage. On average these plans provide a monthly value above traditional Medicare of $86. This consists of basic drug savings; additional benefits; Part B and D Premium buy downs and cost-sharing buy downs.

The attack on Advantage Plans is really an attack on minorities and/or the poor. Around 57% of Advantage enrollees earn between $10-30K per year. And 27% of MA enrollees are minorities vs. 20% in FFS Medicare. These individuals receive additional benefits ranging from 66% having eyeglass coverage to 92% being covered for additional acute care days. And Advantage Plans reveal one of Medicare FFS price controls major issues. Around 26% of FFS enrollees have no usual doctor and 7% had trouble getting care. These figures are 8% and 3%, respectively, for Medicare Advantage Plans.