V I E W P O I N T

Medicare Advantage Plans: Not the Best Way to Help Low-income and Minority Beneficiaries

America 's Health Insurance Plans (AHIP) released a report in February 2007 asserting that minorities and low-income beneficiaries would be adversely affected by reducing overpayments to Medicare Advantage (MA) plans. ¹Contrary to claims the insurance industry is making as part of their efforts to retain overpayments, the facts are:

• Private plans do NOT attract a disproportionate number of low-income beneficiaries.

• Low-income and minority enrollment in Medicare Advantage is consistent with the overall proportion of minorities and low-income beneficiaries in Medicare as a whole. Minorities make up approximately 18 percent of the entire Medicare population and account for 17 percent of Medicare Advantage enrollees. ²

• AHIP's MA enrollment numbers look large – 38 percent of low-income African Americans and 54 percent of low-income Hispanics ³ - because they are based on beneficiaries they label “active choosers,” defined as beneficiaries who do not have Medicaid or employer-based coverage and who live in areas with at least one Medicare Advantage plan. ⁴In other words, AHIP excludes approximately one-half of all low-income and minority beneficiaries when calculating the numbers in MA plans. This makes the percentage of the remaining beneficiaries who are enrolled in MA plans much higher than it would be if all low-income and minority beneficiaries were taken into account.

• Medicare Advantage is NOT the primary source of supplemental coverage for low-income and minority beneficiaries.

• A recent analysis by the Center on Budget and Policy Priorities found that these Medicare beneficiaries are far more likely to receive supplemental coverage through Medicaid than to be enrolled in Medicare Advantage.

• The Center found that nearly half (48 percent) of all Medicare beneficiaries with incomes under $10,000 receive Medicaid, compared to only 10 percent who are enrolled in private plans.

• Similarly, they found that 58 percent of Asian American beneficiaries, 30 percent of African American beneficiaries and 34 percent of Hispanic beneficiaries receive Medicaid, compared to the 14 percent of Asian Americans, 13 percent of African Americans, and 25 percent of Hispanics enrolled in private plans. ⁵

• The vast majority of minority and low-income beneficiaries prefer traditional Medicare to private plans .

• 25% of Hispanic beneficiaries are in Medicare Advantage; 75% are in traditional Medicare.
• 14% of Asian American beneficiaries are in Medicare Advantage; 86% are in traditional Medicare.
• 13% of African American beneficiaries are in Medicare Advantage; 87% are in traditional Medicare.
• 10% of low-income beneficiaries are in Medicare Advantage; 90% are in traditional Medicare. 

National Committee Position

• Paying Medicare Advantage plans the same as traditional fee-for-service Medicare pays per beneficiary would not adversely affect low-income and minority beneficiaries. It would strengthen Medicare's financing and eliminate excess Part B premiums all beneficiaries in traditional Medicare, including large numbers of minority beneficiaries, are paying to subsidize private plans.

• Savings from eliminating overpayments should be used to help low-income Medicare beneficiaries. The most cost-effective and efficient way to help low-income and minority beneficiaries is to use a portion of the savings collected from eliminating Medicare Advantage overpayments to strengthen the Medicare Savings Programs (MSP) and improve Medicare Part D's Low-Income Subsidy (LIS) program.

¹Low Income and Minority Beneficiaries in Medicare Advantage Plans, 2004, America 's Health Insurance Plans. Available at http://www.ahipresearch.org/PDFs/FullReportAHIPMALowIncomeandMinorityFeb2007.pdf

² Ibid., Table 8A, p. 14

³ Ibid., p. 5

⁴ Ibid., p. 1

⁵ Edwin Park & Robert Greenstein, Center on Budget and Policy Priorities, Low-Income and Minority Beneficiaries Do Not Rely Disproportionately on Medicare Advantage Plans: Industry Campaign to Protect Billions in Overpayments Rest on Distortions, (Washington, D.C.: Revised April 12, 2007) & Edwin Park & Robert Greenstein, Center on Budget and Policy Priorities, Curbing Medicare Overpayments to Private Insurers Could Benefit Minorities and Help Expand Children's Health Coverage , (Washington, D.C.: Revised May 14, 2007).

⁶ Ron Pollack, MA Windfall Payments: A Source of Help for Low-Income Children and Seniors? , Families USA presentation to the TriCaucus, May 11, 2007.
Available at http://www.familiesusa.org/assets/ppt/medicare-advantage-plans.ppt

Government Relations and Policy, July 2007

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