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  • Truth Squad: Busting Myths on Health Care Reform


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    V I E W P O I N T

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

    Due to provisions in the Medicare Modernization Act of 2003 (MMA), private Medicare Advantage plans are now paid an average of 14 percent - or $1000 per beneficiary - more than traditional Medicare. Inflated payments to Medicare Advantage plans, which amount to $15 billion a year, are funded by all taxpayers and all Medicare beneficiaries, not just the 20 percent who are enrolled in private plans. Equalizing Medicare payments would reduce Medicare Part B premiums by nearly $75.00 a year per couple and bring an additional 18 months of solvency to the Medicare hospital trust fund.

    America 's Health Insurance Plans (AHIP), which represents private insurance companies, released a report in September 2008 asserting that minorities and low-income beneficiaries disproportionately rely on Medicare Advantage for benefits that supplement traditional Medicare and that they would be adversely affected by reducing overpayments to Medicare Advantage plans. Contrary 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 low-income and minority beneficiaries in Medicare as a whole. Beneficiaries with incomes less than $10,000 per year make up 17 percent of Medicare enrollees and 16 percent of Medicare Advantage enrollees.
    • AHIP's Medicare Advantage enrollment numbers look large - 41 percent of low-income African Americans and 57 percent of low-income Hispanics - 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. In 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 (45 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 52 percent of Asian American beneficiaries, 26 percent of African American beneficiaries and 37 percent of Hispanic beneficiaries receive Medicaid, compared to the 14 percent of Asian Americans, 20 percent of African Americans, and 32 percent of Hispanics enrolled in private plans.

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

    • 32 percent of Hispanic beneficiaries are in Medicare Advantage; 68 percent are in traditional Medicare.
    • 14 percent of Asian American beneficiaries are in Medicare Advantage; 86 percent are in traditional Medicare.
    • 20 percent of African American beneficiaries are in Medicare Advantage; 80 percent are in traditional Medicare.
    • 16 percent of low-income beneficiaries are in Medicare Advantage; 84 percent 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  

    Government Relations and Policy, March 2009

    References

    Low-Income and Minority Beneficiaries in Medicare Advantage Plans, 2008, America 's Health Insurance Plans. http://www.ahipresearch.org/pdfs/MALowIncomeReport2008.pdf .

    Curbing Medicare Advantage Overpayments Could Benefit Millions of Low-Income and Minority Americans, January Angeles & Edwin Park , Center on Budget and Policy Priorities. http://www.cbpp.org/2-19-09health.pdf

     

    The National Committee is a nonprofit, nonpartisan organization that acts in the interests of its membership through advocacy, education, services, grassroots efforts and the leadership of the board of directors and professional staff. The work of the National Committee is directed toward developing a secure retirement for all Americans.