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Medicare Advantage Is Not Medicare

Bill Nelson, the senior senator from Florida, represents a lot of retirees. He represents, more specifically, a lot of retirees on Medicare Advantage. So though the Democrat is a supporter of health-care reform, he's calling for seniors to be shielded from these "intolerable" cuts. His amendment would protect seniors currently on the plan, which makes some sense, though it could also cost $40 billion over the next 10 years.

People can argue over whether we should protect Medicare Advantage's overpayments or not. But it's important to note that Medicare Advantage is not part of the promise of Medicare. Seniors rightly feel they have paid into Medicare all their lives and deserve the benefits they have been expecting. But those benefits are the basic Medicare plan, and all it guarantees. Medicare Advantage, however, was not part of that promise: It was an experiment to see whether private competition could hold costs down compared with traditional Medicare. It has been a failure. And the continuation of that failure is not part of what seniors were promised during their working years. It might be a tricky policy question in its own right, but it is not part of an inter-generational promise.

By Ezra Klein  |  September 24, 2009; 3:59 PM ET
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One more marker to watch - whether Dem Caucus can withstand pressure by Bill Nelson.

My bet - at least few billions will be thrown his direction for sure. Shameful way Congress works.

Posted by: umesh409 | September 24, 2009 4:05 PM | Report abuse

By the same logic, the prescription drug benefit is not part of Medicare. Should we limit eligibility for prescription drug assistance to only low income seniors? Many (most?) Republicans wanted to do so when Part D was authorized but AARP and the so called progressives demanded full coverage. So if we can provide Part D coverage to high income seniors, why not provide Medicare Advantage to low and moderate income seniors? My parents are in both programs and Medicare Advantage is much more valuable to them.

Posted by: WoodbridgeVa1 | September 24, 2009 4:16 PM | Report abuse

All I know about Medicare Advantage is what the inlaws say about it. They had it until this past year in FL. At first they loved it, and it didn't cost them a thing and covered more than Medicare. Then it kept changing. Then it started costing them. Then it started costing them more. Then they dropped it.

It's not Medicare, it's private insurance. And like all private insurance you are at the mercy of their whims.

My father in law swears by the VA. Not sure how that plays into all this but he is very happy with the heart care he has received there.

Posted by: luko | September 24, 2009 4:43 PM | Report abuse

Some people have no alternative to Medicare Advantage: in many areas of the nation, there are no Medicare-accepting providers. So to these people, taking away Medicare Advantage is taking away everything.

There are ways to split hairs and say that taking away the current health care plan of these elderly Americans isn't somehow curtailing the choices available to them... but such hair-splitting doesn't seem to be selling very well. Maybe the President should so another speech and try throwing in the "not cutting any legally guaranteed health care benefits" phrase.

As the Finance bill gets more and more screwy, mainstream Democrats seem to be getting more and more nervous about supporting it. More amendments to come...

Posted by: rmgregory | September 24, 2009 4:57 PM | Report abuse

One part that Ezra doesn't mention, but some of you have, is that Medicare Advantage plans often provide non-Medicare benefits. For example, we see "enhanced benefits" such as coverage for accupuncture, chiropractor, vision, dental, etc. To the extent that plans are free (beyond the standard Part B premium), these services are coming out of subsidies that go beyond the cost of the basic Medicare benefits.

Posted by: GrandArch | September 24, 2009 5:00 PM | Report abuse

I'm a strong supporter of the Pres and his commitment to health care/insurance reform. That said, my family and I are becoming increasingly concerned that this may be moving too fast, and all the politics and amendment deals under short deadlines may end up causing a lot of problems and unintended outcomes. The more one focuses on the specifics and details, the more complicated the issues, the trade-offs, and the impact on cost, subsidies, deficit, etc. Sen. Nelson's effort is latest example: Advantage reform was a major source of funding for the reform bill and played a key role in the overall bill re paying for itself, increasing subsidies for low- & moderate=income, and on deficit. So cutting back on Advantage reform means $$ have to come from somewhere else or increase the deficit. We've been trying to analyze the impacts on our own health insurance, and we're beginning to see where there could be a lot of adverse effects on our situation.

Posted by: zippyzeph | September 24, 2009 5:25 PM | Report abuse

--"It was an experiment to see whether private competition could hold costs down compared with traditional Medicare."--

Trademark Klein dishonesty. It ain't "private competition" if the whole thing is prescribed by government. Just because someone somewhere was allowed a few modicums of flexibility does not make the thing an offspring of the free market.

The failure of the endeavor is the usual government's "success" at giving away other people's money. People flocked to the new freebie.

Posted by: msoja | September 24, 2009 7:28 PM | Report abuse

There is a whole lot of confusion about Medicare Advantage, bare Medicare and Medicare with supplements. What most don't know is that MA does offer a few more benefits and often the monthly premiums are zero or very low. There are deductibles, but overall the cost to seniors of most MA plans is a lot less than Medicare with supplements. Another difference is that you cannot drop MA and get a supplemental plan without being "underwritten" -- that is -- when you join Medicare, insurance companies cannot charge you a different premium based on prior illness. But once you have MA more than year, if you drop it, you are subject to higher premiums because of previous illnesses. So that is a big drawback to MA. It sort of traps you in. Nevertheless, MA can be a great and quite cheap plan for seniors in many parts of the country.

Posted by: LindaB1 | September 24, 2009 9:07 PM | Report abuse

--"MA can be a great and quite cheap plan for seniors in many parts of the country."--

Hence its overwhelming popularity, and the reason that the government now has to try to cool it. It's Cash-for-Clunkers on steroids, so to speak, and it's ever thus when government is free to give away money stolen (with threats of impoverishment and incarceration) from the earnest citizenry.

Posted by: msoja | September 24, 2009 9:53 PM | Report abuse

My Medicare Advantage plan is with Kaiser-Permanente. considered one of the models of how to deliver healthcare. I've had Kaiser for over 30 years and it works the same now as before I was on Medicare. I hope I don't lose the ability to get my healthcare through Kaiser if Advantage plans disappear. It doesn't seem that I could use fee for service Medicare at Kaiser, given the way Kaiser works.

Posted by: pcae | September 24, 2009 10:35 PM | Report abuse

The insurance companies can keep offering their Medicare Advantage plans, just like they have since the '70's. Only now, unlike the MA plans since the Republican Medicare Prescription Drug Part D plan in 2003-that was a giant hand out to the health and drug insurance industries and a huge step in the door to privatizing Medicare-The government won't be subsidizing them at a 14% rate above traditional Medicare.

So insurance companies can keep offering MA plans like they have since the 70's, but they'll only get reinbursed like they were before 2003.

Posted by: tslynch27 | September 25, 2009 1:44 AM | Report abuse

Ezra - There's a nuance here that has not been reported and specifically applies to Florida. FL is one of the highest cost states for Medicare. Med Advantage plans deliver the traditional Medicare benefits at less than 85% of the government's cost of delivering those benefits, in many parts of the state. Right now, they get to keep much of the difference (75%) between their bids and the actual gov't costs. They use this "extra" amount to provide more benefits or to keep premiums low. But they still save the gov't money in Florida.

The Senate Finance bill would have paid Med Adv plans according to their bids, so only 85% of gov't costs in FL. What Nelson did was make sure that Med Adv plans in high cost states get the same amount as the fed gov't so that seniors can keep the extra benefits. In these high cost states (FL, NY, CA, NJ), Med Adv actually SAVES money vs. traditional Medicare.

Now, you're right that Nelson also tried to save Med Adv plans in other states too, where they have higher costs than traditional medicare, but that effort failed.

Posted by: mbp3 | September 25, 2009 2:15 PM | Report abuse

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