Time is a flat circle: What can the ACA learn from Medicare Advantage?
Who can remember the 1990s and early 2000s when healthcare history feels like it’s changing on a weekly basis? However, there are still lessons to be learned from Medicare for the Affordable Care Act (ACA). Medicare Advantage is a successful, health-plan delivered set of government-mandated benefits. Let’s get a good-ol’, bipartisan Gang-of-SomeNumber together and fix the ACA. A fix must be Republican-sponsored to survive the House and be signed by the President.
By way of background, Medicare Advantage is the voluntary managed care program that is used by over a third of Medicare beneficiaries (and growing) to get their benefits. The health plans may pick up some or all of Original Medicare’s cost sharing and benefits not typically covered, like dental care, vision, or exercise programs in order to make each health plan more competitive with others. The market is very stable and the average beneficiary has broad choice between plans.
Preceding Medicare Advantage, Medicare+Choice was a Clinton-era initiative, passed in 1997, to similarly offer Medicare benefits through private health plans. This program eventually died on the vine.* It was largely seen as a failure of rate-setting for plans. Plans dropped out, rates went up, and beneficiaries stopped buying plans. (Sound familiar?) When the Medicare Modernization Act (MMA) was passed in 2005, the legislation was loaded down with new rate-setting procedures favorable to plans, as well as heavy subsidization. The theory was that this population was riskier to insure, there might be a pent up demand for care in some cases, and in rural areas you need to work harder to attract plans. It worked. This has been a very profitable market for health plans.
Republicans and Democrats have shown that they agree on the approach of health plans delivering government benefits in a marketplace-like format where the consumers pick from plans. This is not controversial — in fact, it is commonplace. This is how Medicare Advantage operates, most state Medicaid and CHIP programs operate this way, and all federal employees — civilian, including Congress, and defense — choose their plans this way. In order to get enough plans to have choice, you have to pay the plans enough. After that, they can compete on benefits, provider network, quality, and customer service.
In order to fix the ACA, for several years experts have proposed fixing the “3 Rs”: risk-adjustment, risk-corridors, and reinsurance. The upshot of this is that these policies would correct payments to health plans to take care of people who were sicker or riskier than expected, which keeps premiums lower. These companies are leaving the markets because they are losing money and people are being forced to buy expensive insurance. No one is happy.
Earlier this year, Senator Lamar Alexander (R-TN) indicated on a couple of occasions that he thought fixing the ACA was prudent. Alexander is the Chairman of the Health, Education, Labor and Pensions (HELP) Committee in the Senate, one of two committees responsible for the ACA. The other is the Senate Finance Committee, chaired by Senator Orrin Hatch (R-UT), who has also indicated he would be open to “anything that would improve the system.”
Let’s keep the infrastructure we have and have spent billions of dollars implementing — all the state based and federal marketplaces that are set up, their systems, their regulations, the insurance plans, the people who have jobs handling all of this. Let’s not blow all of this to shreds. Let’s learn from Medicare+Choice and Medicare Advantage. Rather than waiting for the program to die, let’s just fix it now. We know what needs to be done.
* Note: Medicare+Choice was born under Medicare Part C and never truly died. It was re-branded Medicare Advantage under the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2005, which also added Medicare Part D. At that point, “Medicare+Choice” was retired.
