Spending more on Medicare Advantage doesn’t seem to buy better health

Spending more on Medicare Advantage doesn’t seem to buy better health


Medicare Advantage and traditional Medicare enrollees visit hospitals and emergency departments at the same frequency, despite members enrolled in the privatized program receiving more care management services, a new report finds.

Thirty-four percent of traditional Medicare and Medicare Advantage members aged 65 and older visited an emergency department during the two-year period between 2016 and 2018, for example, according to an analysis published by the Commonwealth Fund Thursday.

Hospitalization rates were also similar, with 28% of Medicare Advantage members and 27% of traditional Medicare enrollees visiting a hospital over those two years.

Researchers relied on data from the 2018 Medicare Current Beneficiary Survey and a Commonwealth Fund survey conducted this year. Researchers separately assessed information on beneficiaries eligible for both Medicare and Medicaid through special needs plans when the sample sizes were sufficient.

The similarities in patient outcomes raise the question of why Medicare Advantage plans cost the government more than fee-for-service Medicare, particularly as enrollment in the privatized health programs grows, said Gretchen Jacobson, the Commonwealth Fund’s vice president for Medicare and the report’s author.

By 2025, half of all eligible beneficiaries are expected to be enrolled in Medicare Advantage. Brokers and agents can receive greater compensation for enrolling seniors in Medicare Advantage than in Medicare supplement plans that pair with Part A and Part B, creating financial incentives to recommend Medicare Advantage, according to a separate Commonwealth Fund study published Tuesday.

“How valuable are those extra services if the outcomes are the same?” Jacobson said. “It’s really important for the government and policymakers to evaluate this, given Medicare Advantage plans right now are paid more than what it would cost to provide the same care to people in traditional Medicare.”

In addition to barely different patient outcomes, researchers found that individuals enrolled in both programs had comparable rates of chronic conditions and that they identified along similar racial, ethnic and economic lines, not including special needs plan enrollees.

The alikeness between the two sets of enrollees represents a historical change for the privatized health program.

As recently as 2015, Medicare Advantage enrollees were younger and included greater proportions of racial and ethnic minorities and low-income people compared to traditional Medicare, according to a separate report the Commonwealth Fund issued last year. Beneficiaries in private Medicare plans also suffered from more complex needs, that study found, but the analysis didn’t separate special needs plan enrollees from other Medicare Advantage members.

As the program matures, the differences between patients has leveled across Medicare Advantage and fee-for-service Medicare, with 41% of traditional Medicare enrollees having at least three chronic conditions compared to 43% of Medicare Advantage members. The prevalence of arthritis, cancer, diabetes and depression is nearly the same among traditional Medicare and Medicare Advantage enrollees.

The new study didn’t consider the severity of these conditions. Prior analyses have shown that individuals in Medicare Advantage plans consume fewer services after adjusting for health conditions, suggesting this population’s ailments are not as serious compared to the fee-for-service population. Medicare Advantage members with diabetes, asthma breast cancer or prostate cancer all had lower rates of spending than individuals in fee-for-service Medicare with the same conditions, according to a 2019 Kaiser Family Foundation study.

“We’ve really seen an expansion of Medicare Advantage plans nationwide since the [Affordable Care Act], including an expansion in the number of companies that are offering Medicare Advantage plans, as well as expansions to many pockets of the country,” Jacobson said. “That could help to account for the equalizing of patient populations.”

The patient makeup among dual-eligible, special needs plans differed from both fee-for-service and individuals enrolled in just Medicare Advantage plans, however.

Dual-eligible people enrolled in Medicare Advantage were significantly more likely to suffer from at least three chronic conditions than individuals enrolled in the other programs, with 43% reporting at least three chronic conditions and 50% saying they were diagnosed with at least six chronic conditions.

Special needs plan beneficiaries were also more than twice as likely to identify as Black and three times as likely to identify as Latino than enrollees in Medicare Advantage or traditional Medicare. These populations are statistically more likely to be low-income and have poorer health than white people. White people also are less likely to enroll in special needs plans.

Medicare Advantage special needs plan carriers cover a “very vulnerable population,” Jacobson said. “It really calls attention to the fact that special needs plans need a closer look with perhaps a different policy lens because they’re serving such a high-need population. They could be a focus for equity-related policies.”


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