Medicare Advantage Might Not Be a Boondoggle Anymore

| Mon Aug. 18, 2014 2:20 PM EDT

I've written periodically in this space about the problems with Medicare Advantage. In a nutshell, it costs a lot more but provides very little in the way of additional services. It's really not much of a poster child for the benefits of program choice.

But wait! Apparently a big part of the problem with MA was the fact that people were allowed to switch in and out of their plans on a monthly basis. If they got sick, they could quickly switch into MA if that was a better deal for them. This obviously raised the cost of MA as sick people switched in to avoid the copays and other limitations of traditional Medicare.

However, that changed in the mid-2000s, when beneficiaries were required to choose a plan and stick with it for a full year. Austin Frakt provides the details of a new study:

By 2006-2007, health differences between beneficiaries in Medicare Advantage and those in traditional Medicare had narrowed....Also, in contrast to studies in the 1990s, more recent work finds that Medicare Advantage is superior to traditional Medicare on a variety of quality measures. For example, according to a paper in Health Affairs by John Ayanian and colleagues, women enrolled in a Medicare Advantage H.M.O. are more likely to receive mammography screenings; those with diabetes are more likely to receive blood sugar testing and retinal exams; and those with diabetes or cardiovascular disease are more likely to receive cholesterol testing.

That Health Affairs paper also found that H.M.O. enrollees are more likely to receive flu and pneumonia vaccinations and about as likely to rate their personal doctor and specialists highly.

So now things are a little murkier. MA still costs more than traditional Medicare, but only by 5-6 percent. And recent evidence suggests that MA beneficiaries might be getting enough additional benefit to justify that much extra money. It's still not clear that MA is worthwhile, but it appears now to be at least worth further study.

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