The US government expects to spend nearly $500 billion dollars on Medicare Advantage plans by the end of the decade. Those numbers, combined with a recent study estimating that Medicare will be paying out more in claims than it receives in revenue, have prompted the administration to consider the future of Medicare Part C. So what is this part of Medicare and why is it receiving so much attention? Let’s start with the basics. Generally speaking, Medicare Advantage plans are private-sector managed care plans, or PMCs, which are designed to provide the same benefits that Medicare has to offer, but at a lower monthly premium and a lower co-payment.
Medicare Advantage plans typically offer prescription drug coverage at a lower cost than in-network coverage; they have shorter waiting periods; and some do not accept enrollees who have pre-existing conditions. Not all plans are available in every state, so be sure to check your local regulations.Under the law, these PMCs must offer an assortment of services and benefits at rates that are at least comparable to what Medicare pays for services and benefits, so the companies must not rely solely on their profits, but also on the policyholder’s financial solvency. So even though there are regulations requiring them to meet these goals, companies still have the freedom to set their own prices.
Over the past several years, the Obama Administration has received criticism from members of Congress and other public officials for allowing the growth of PMCs without doing anything to rein them in. Many in Congress and the Administration argue that PPCs are taking advantage of Medicare’s limited funding to provide some of the most costly and over-the-top health care options available. Others point out that the companies that provide these plans can raise premiums to make up for losses incurred when they have to pay lower benefits.In addition, the private plans include annual fees and copayments for services provided that are not mandated by the federal government. This seems to be a double-edged sword: If the company has to pay for a service it is not supposed to be paying for, then the costs are likely to rise as the plan balance grows.
For years, the Obama Administration has been pressing Congress to close the gap between the cost of health care and the cost of financing it. In fact, Health and Human Services Secretary Kathleen Sebelius is leading the charge to change the law so that the government would take control of the payment process, including collecting payments. While this seems to be a step in the right direction, it is far from guaranteed that the president’s health care plan will be fully implemented.Some people think that the policy will never become law because the administration did not win enough congressional support. Others believe that it is simply too difficult to implement for the administration to get it done. Still others say that it will only work if the program is incorporated into Medicaid and Medicare, and not the other way around.
Either way, the federal healthcare policy will not change until the second decade of the 21st century. At this point, there is still plenty of time for changes and revisions to come about.The government does have its limits, of course, and the agency with the authority to change these is the Office of Management and Budget (OMB). OMB recently issued a directive saying that, “emergency and short-term healthcare management changes may be necessary to help stabilize the Part C health plans in the coming years.”
This policy memo comes after a study from the GAO in 2020 that noted that many of the long-term problems with the plan were not being addressed by OMB, a problem that could result in less consumer choice and higher premiums. For this reason, the agency has been forced to act. It seems that the Obama Administration recognizes that the changes it wants to make could mean more political pressure on the Congress and that would-be policy makers, in both parties, welcome it. And that means that 2020 will mark an important turning point in the future of Medicare Part C. if you think Medicare Advantage plans 2020 is for you visit https://www.medicareadvantageplans2020.org