Medicare Advantage Plans
Here is an interesting overview from Austin Frakt:
- Before 1997, plans were paid 95% of their estimated costs. Since then … plans have been paid far above what it would cost to cover a beneficiary in FFS Medicare (Frakt, Pizer, Feldman 2009a).
- In 2006, the value to beneficiaries of each taxpayer dollar spent on additional benefits above those provided in 2003 was about 14 cents (Pizer, Frakt, Feldman 2009b).
- Some coordinated care plans (CCPs) have been able to negotiate prices below those of FFS Medicare … In other areas, CCPs pay higher rates than FFS Medicare. (Pizer, Feldman, Frakt 2005, Pizer, Frakt, Feldman 2008).
- Increasing competition … lowers premiums and raises generosity of benefits. (Pizer, Frakt 2002). Higher concentration is associated with higher generic and brand copays and lower drug caps (Pizer, Frakt, Feldman 2003).
- According to one estimate [“competitive bidding”] could reduce Medicare program spending by 8% by setting the government payment rate at the lowest submitted bid.
And this is the part of Medicare that we’re getting rid of under Obamacare?? What happens to all of the seniors who were depending on Medicare Advantage?
Yeah, but then we’d have to cut out all those insurance companies and other third parties who depend on guaranteed prices and captive markets to pay their country club bills. And Republicans are supposed to be the ones who don’t care about people. Go figure.
I’m a fan of competitive bidding. Whenever this has been proposed, the vendors who rely on fixed-payments (i.e. durable medical equipment) all scream bloody murder.
Interesting review of the literature.
“In 2006, the value to beneficiaries of each taxpayer dollar spent on additional benefits above those provided in 2003 was about 14 cents (Pizer, Frakt, Feldman 2009b).”
The 14 cent figure isn’t derived from the market value of the services obtained per each dollar of spending, but rather of the consumer surplus (theoretically) derived from the spending on medical goods and services.
If there was ever a claim crying out for empirical verification – this is it. I would be quite surprised if seniors would be willing to forego access to the goods and services obtained by each dollar of spending in exchange for $0.14 in cash (or anything remotely close to that), but it would certainly be interesting to test out this figure in practice.
Anyone know if anything like that has ever been done and reported in the literature?