Will Obamacare hurt Medicare Advantage?
U.S. Sen. Marco Rubio has vigorously opposed Obamacare for many reasons. Lately, he’s been invoking his mother, suggesting she’ll be harmed by the president’s health care plan.
Mrs. Rubio is one of the millions who choose to receive Medicare benefits through privately run Medicare Advantage plans, Rubio said in a Senate floor speech Aug. 1.
"My mom’s on Medicare Advantage and one of the reasons they get her business is that, in addition to good doctors, they actually will pick her up from home because she can’t and doesn’t drive and take her to her doctor’s appointments,’’ he said.
However, since the Affordable Care Act calls for less spending on Medicare Advantage, "the chances are that soon (seniors) will open up the mail to the bad news that your Medicare Advantage ... has been changed in a negative way for you because of Obamacare,’’ he continued.
Rubio has been repeating this point as he tours Florida during the August break.
Here at PolitiFact, we wanted to know whether Medicare beneficiaries are indeed about to get a nasty surprise.
Will Medicare Advantage plans increase out-of-pocket costs and diminish benefits?
And if these things happen, will it be the fault of Obamacare?
We won’t rate Rubio’s statement on our Truth-O-Meter, since it’s essentially a prediction. But as we’ll see, experts told us Rubio’s remarks oversimplify matters and put too much blame on the health care law for a situation that predates Obamacare.
A short primer
First of all, Rubio is not at all wrong to think that Advantage costs and benefits might change — because they do every year, as government funding as well as medical costs, utilization and other market factors change.
This was happening long before Obamacare and even Barack Obama were household names. It’s one reason Medicare beneficiaries are urged to study their options every year during open enrollment.
Since the 1970s, Medicare beneficiaries have been able to receive benefits through either original Medicare, the fee-for-service system run by the government, or private plans, mostly managed care plans financed by the government, but run mainly by insurance companies. These have been called Medicare Advantage plans since 2003.
Today, around 14.4 million seniors and disabled people — that’s 28 percent of all Medicare beneficiaries — are in Medicare Advantage, the most ever.
Advantage plans are required to offer basic health benefits that are at least as rich as original Medicare. But many offer extras, such as rebates on premiums, routine dental care, gym memberships and rides to the doctor, in order to compete for business.
Medicare Advantage members pay premiums just like people who get their benefits through original Medicare.
The private companies turn a profit depending in part on how well they manage costs of care. Sweetening the deal: The government spends more per person — 7 percent more last year for Advantage beneficiaries compared with those in original Medicare, estimated the Medicare Payment Advisory Commission.
The Affordable Care Act aims to gradually bring costs of the two programs in line. At the same time, it seeks to reward private insurers that offer the best care — these are the plans that top the new star rating system.
You might think shrinking payments for Medicare Advantage would mean fewer enrollees, but that hasn’t happened. Since passage of the Affordable Care Act in 2010, enrollment in Medicare Advantage plans has grown by 30 percent.
Why are plans doing so well? No one’s sure, but there are lots of possible contributors. Health care spending overall has slowed in recent years. Another factor may be better management by the plans, according to a recent Kaiser Family Foundation report. Plus, aging baby boomers are more accustomed to managed care than their elders.
Also, the Obama administration has compromised somewhat. Earlier this year, when the administration proposed cutting Advantage payments by more than 2 percent, the industry fought back. On April 1, the Centers for Medicare and Medicaid Services (CMS) said it would increase payments 3.3 percent — while continuing with quality-based payments and the overall effort toward parity in funding between original Medicare and Medicare Advantage.
Industry reaction was mixed. Karen Ignani, president and CEO of America’s Health Insurance Plans, praised the move for helping to "stabilize Medicare Advantage.’’ UnitedHealth Group CEO Stephen Hemsley, however, said rates were still too low and his firm, the biggest Advantage player, might shrink its business.
When we asked Rubio’s office to elaborate on his statements about Medicare Advantage, a spokesman pointed to such funding cuts.
Predictions are, however, tricky.
After the health law passed in 2010, several government and private analysts predicted Advantage enrollment would decline. More recently, the Congressional Budget Office projected slow growth through 2022, while the CMS Office of the Actuary expects a decline between 2015 and 2018, then an increase.
It’s similarly tough to predict what will happen with costs and benefits, though it’s important to note that Advantage plans can never offer skimpier coverage than original Medicare. Government payments may go down, but they’re only one of the many factors that go into how insurers determine their offerings.
"The payment formula to Medicare Advantage is complex,’’ said Dan Mendelson, CEO of strategic analysis firm Avalere Health. "Honestly, to say that as a result of Obamacare there would be a reduction to Medicare Advantage would be misleading at best, because there are a lot of other things that come into play.’’
See you in September
Since there is always a lot in play when it comes to Medicare Advantage, experts say it’s just too early for Rubio to worry seniors. Insurers have submitted their bids to Medicare, and the annual announcement of plan changes comes in September. Open enrollment is Oct. 15 through Dec. 7.
"We don’t know what’s going to happen, but that’s true every year,’’ said Joe Baker, president of the Medicare Rights Center, the national nonprofit advocacy group that fields around 12,000 calls a year to its consumer help line.
Still, Baker and others doubt seniors will find a September surprise in their mailboxes.
"If the last few years under the (health law) and this administration is any indication, it’s going to be a pretty smooth year and a pretty even year,’’ Baker said.
Mendelson, too, is dubious of a rate spike.
"In all likelihood, rates are going to be stable, and they’re going to be workable,’’ he said.
As for Mrs. Rubio’s ride?
"The plans will decide whether to offer additional benefits based on additional market forces,’’ he said. "It’s a competition.’’