Talking Health

President Obama’s Budget Director, Peter Orszag, spoke to the Senate’s Committee on Finance on March 10th.  Orszag went over some of the points of the president’s proposed budget, including the reductions to Medicare Advantage funds. (Click here to take a look at Orszag’s entire testimony)

The Basics:

• Medicare is currently overpaying Medicare Advantage by 14 percent more than it’s spending on the people in the traditional plan
• Orszag gave some context: “MedPAC estimates that the Federal government pays $1.30 for each $1.00 in Medicare Advantage supplementary benefits, without any compelling evidence of better quality of care.” 
• The Obama administration is proposing a competitive system, where Medicare Advantage payments would be determined by an average of plans’ bids
• “This would allow the market, not Medicare, to set the reimbursement limits,” said Orszag. “Our proposal would save taxpayers more than $175 billion over ten years…” 

America’s Health Insurance Plans (AHIP) put out a statement back on February 26th, just after Obama initially released his proposals.  Part of the statement read: “…his proposal would force seniors enrolled in Medicare Advantage to fund a disproportionate share of the costs to reform the health care system.  A cut of this scale would jeopardize the health security of more than ten million seniors enrolled in Medicare Advantage and would turn back the clock on innovative payment incentives to improve the quality of care that patients receive.” (Keep in mind that AHIP represents insurance companies)

It seems that the biggest part of this debate is: Are those enrolled in Medicare Advantage getting better care than those in the traditional Medicare plan? Orszag says there is no real evidence that they are. AHIP, obviously, disagrees.

Check out one of Trudy’s posts on Medicare Advantage Plans. Take a look at the comments, where one reader wrote “As an insurance agent and viewing this from the inside. Medicare Advantage is a great Dis-Advantage.” Yet, there are many individuals who are happy with their Advantage Plans.