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.
An Innovation Lab
For decades, private Medicare plans have served as an innovation lab for the federal government, pioneering new ways of delivering and paying for care that ultimately spread to the broader Medicare system.
A study by Peter Huckfeldt, the lead researcher and an assistant professor in the Division of Health Policy and Management at the University of Minnesota’s School of Public Health, tested whether a payment model called capitated care—that is, paying a set amount per patient, per month, rather than paying for every single service provided—resulted in worse care. It didn’t—but it did save a lot of money. If Medicare patients in the study had the same results as Medicare Advantage patients, the Medicare system would save $1,455 for every patient who had a joint replacement, $2,397 for stroke, and $1,143 for heart failure.
“There has been extensive growth in post-acute care, and research suggests that it’s related in part to the way it’s paid for,” Huckfeldt said. “In traditional Medicare, there were limited financial incentives to use it more efficiently or to coordinate care across providers, but that is changing with new programs like accountable care organizations and bundled payments.”
Figuring out ways to lower health costs without sacrificing quality is critical, particularly as boomers continue aging into Medicare at the rate of nearly 11,000 per day, putting immense pressure on a system already struggling to contain rapidly rising health care costs.ii A report from the trustees of the Social Security and Medicare trust funds estimated that Medicare will be insolvent by 2029 if things don’t change.iii
Many experts contend that Medicare Advantage could be an important part of the solution to securing the sustainability of the Medicare program. Partly due to innovations such as capitated payments and value-based care (or paying doctors and hospitals based on the quality of their services rather than the quantity), Medicare Advantage HMO plans provide benefits for their members at 93 percent of the cost of what the federal government would pay for those same benefits for a beneficiary in Original Medicare, a $4.2 billion difference.iv
But innovations in Medicare Advantage extend to more than just payments. Indeed, private Medicare plans began covering services considered fundamental to quality senior health care years before the federal government did so. Private Medicare plans, for example, began covering prescription drugs in 1985 and preventive care services in 1989. Medicare followed suit more than two decades later.
UnitedHealthcare sees technology as a potent force for future innovation. Medicare Advantage plans are eager to make use of apps and wearable devices that help caregivers monitor older adults’ medications and manage doctor appointments, while wireless glucose and blood pressure monitors could give doctors and nurses real-time data to help them manage patients’ chronic diseases.
Check back tomorrow to read about one final Medicare Advantage achievement as we conclude our 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 Annual Performance Plan for Fiscal Year 2013, Social Security Administration https://www.ssa.gov/agency/performance/2013/FY%202013%20APP%20and%20Revised%20Final%20Performance%20Plan%20for%20FY%202012.pdf
iii A Summary of the 2017 Annual Reports, Social Security and Medicare Boards of Trustees https://www.ssa.gov/oact/trsum/
iv Does Medicare Advantage Cost Less Than Traditional Medicare?, The Commonwealth Fund, http://www.commonwealthfund.org/publications/issue-briefs/2016/jan/does-medicare-advantage-cost-less