Free-Market Think-Tank Applauds Obama Administration Decision on Medicare Advantage Today

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Washington, D.C.David Hogberg, senior fellow for health care policy at the National Center for Public Policy Research, is applauding the Center for Medicare and Medicaid Services decision on Medicare Advantage today.

“CMS made the right decision by dropping the 2.3% cut in Medicare Advantage plans and replacing it with a 3.3% increase,” said Hogberg. “The cuts to Medicare Advantage due to ObamaCare are bad enough. To impose additional cuts on Medicare Advantage based on a budget gimmick would have been inexcusable.”

Medicare Advantage plans enable Medicare beneficiaries to receive their benefits through private insurance providers. They often offer lower-cost sharing and more benefits than traditional Medicare. They have proven popular: In 2012 over 13 million beneficiaries (27%) enrolled in MA plans.

The states with the largest percentages of Medicare Advantage enrollees are: Minnesota at 46%, Oregon at 41%, Pennsylvania at 38%, Arizona at 37%, Ohio at 36%, Florida, Colorado and Utah at 34%, and New York and Wisconsin at 32%.

ObamaCare already imposes a cut of about 5 to 6 percent in Medicare Advantage plans for 2014. CMS had initially planned to use the sustainable growth rate – a cut in Medicare fees to physicians that Congress regularly suspends – to justify an additional cut of 2.3%. Instead, CMS dropped the sustainable growth rate from its formula to produce a 3.3% increase.

“Medicare Advantage serves many lower income and minority seniors, ones who have difficulty with Medicare’s cost sharing,” Hogberg said. “A bigger cut would have fallen hardest on them, and these are the people that, presumably, ObamaCare is supposed to protect.”

According to America’s Health Insurance Plans, about 38% of enrollees are Hispanic and 31% are African-Americans. Among those enrollees with annual incomes between $10,000-$20,000, 33 percent were in a MA plan, 14% had Medigap plans, and 20 percent had no supplemental coverage.

For background information, please see “The Liberal Medicare Advantage Revolt: Democrats Suddenly Object to Cuts in Private Insurance for Seniors” in the March 29, 2013 Wall Street Journal.

David Hogberg, Ph.D., is a health care policy analyst for the National Center for Public Policy Research. Previously, Dr. Hogberg was a Washington Correspondent for Investor’s Business Daily, specializing in his coverage of health care and Medicare. Prior to IBD, he worked as a policy analyst studying health care and other issues for various think-tanks, including the National Center for Public Policy Research, and for the office of Representative Jeff Fortenberry. Dr. Hogberg holds a Ph.D. in political science from the University of Iowa. He is currently working on a book entitled “Medicare’s Victims: How The U.S. Government’s Largest Health Care System Harms Patients And Impairs Physicians.”

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