Unless you’re a political junkie or an avid follower of economic policy, chances are you don’t remember much about the Balanced Budget Act of 1997, and based on the name alone, it may not sound like life-changing stuff. But as it turns out, it helped revolutionize health care for older adults over the last 20 years.
In 1997, 5.2 million people (14 percent of Medicare beneficiaries) opted to get their Medicare benefits from a private company rather than through Original Medicare. The enactment of the Balanced Budget Act in August 1997 led to the creation of a program called Medicare + Choice that dramatically expanded the private plan options available to consumers. Today that program is known as Medicare Advantage.
Over the past 20 years, the number of people enrolled in Medicare Advantage plans has more than tripled to nearly 20 million as of August 2017 – just over a third of beneficiaries.i Growth in recent years is especially impressive, with 71 percent more people enrolled in Medicare Advantage plans today than in 2010.
“Trust is at the core of the increasing popularity,” said Brian Thompson, CEO of UnitedHealthcare Medicare & Retirement, the largest provider of Medicare Advantage plans nationwide. “The quality improvements that we’ve seen show how Medicare Advantage has invested in care coordination and in proactively ensuring that people are getting the care they need, and that has driven a level of trust.”
Beyond its popularity, Medicare Advantage has made meaningful contributions to the strength of the U.S. health care system as well as the health and well-being of the country’s senior population in the past two decades.
So, in observance of the 20th anniversary of Medicare Advantage, let’s highlight five of its most notable achievements and how they’ve impacted America’s seniors.
Filling a Critical Gap for Low-Income People
About 37 percent of people with a Medicare Advantage plan earn less than $20,000 a year, according to the Better Medicare Alliance.ii And there’s good reason for that.
Many Medicare Advantage plans have low monthly premiums, with some as low as $0, and they all offer a level of predictability in costs that can be especially important to people living on a fixed budget.
Original Medicare generally covers about 80 percent of a person’s Part B costs for doctor visits and other outpatient care, leaving the beneficiary responsible for the remaining 20 percent. And there’s no limit on how much a person may have to pay for their care, meaning a tough year from a health standpoint could leave someone responsible for footing thousands of dollars of medical bills.
Medicare Advantage, on the other hand, offers predictable copays for most services, a health plan feature many people are familiar with from their working years. They also cap how much a person has to pay out of his or her own pocket in a given year through something called an out-of-pocket maximum. That cap can offer a great deal of peace of mind to a senior worried about how he or she will afford unexpected medical bills.
Medicare Advantage plans also often cover services that Medicare Part A and Part B do not, such as prescription drug benefits, dental care, vision care and even gym memberships.
The financial benefits of Medicare Advantage are critical to the many baby boomers who have not saved enough for retirement. The median amount of retirement savings for a household headed by people approaching retirement is just $12,000, according to the National Institute on Retirement Security.iii That’s not nearly enough to sustain most people through their golden years, but affordable health plans with predictable costs could help.
“The financial value is there, plain and simple,” Thompson of UnitedHealthcare said. “These plans offer additional benefits, often at no cost or a very low cost, as well as a level of financial security. No one knows when they may face a catastrophic health situation, and having out-of-pocket limits provides additional peace of mind.”
Check back tomorrow for the fourth of five Medicare Advantage achievements we’re highlighting in celebration of the program’s 20th anniversary this year.
Think Medicare Advantage could be right for you? Check out the plans available in your area by using the Plan Finder on www.Medicare.gov, or visit www.UHCMedicareSolutions.com to learn more about UnitedHealthcare’s Medicare Advantage plans. You can make changes to your coverage during Medicare Open Enrollment, which ends on Dec. 7.
Plans are insured through UnitedHealthcare Insurance Company or one of its affiliated companies, a Medicare Advantage organization with a Medicare contract and a Medicare-approved Part D sponsor. Enrollment in these plans depends on the plan’s contract renewal with Medicare.
i CMS enrollment data, 2017
ii Medicare Advantage Demographic Report-February 2015, Better Medicare Alliance http://bettermedicarealliance.org/policy-research/resource-library/medicare-advantage-demographics-report-february-2015
iii The Retirement Savings Crisis: Is it Worse Than We Think?, National Institute on Retirement Security http://www.nirsonline.org/storage/nirs/documents/Retirement%20Savings%20Crisis/retirementsavingscrisis_final.pdf