Kent Garber
In Florida, more than 3 million people are on Medicare, the government-run healthcare plan for the elderly. About a third get their benefits through a program called Medicare Advantage, which often at no extra cost offers additional perks such as eye and dental care, sometimes even gym memberships.
Medicare Advantage is a highly popular option: More than 10 million seniors have signed up for it nationwide. But it's also become a huge drain on the federal budget, and according to many experts, it poses a growing threat to the financial health of the entire Medicare program. The result is that Medicare Advantage has become a major, if poorly explained, flash point in the healthcare reform debate.
During the marathon vote on the House healthcare bill this month, one Republican after another stood up and charged that the bill would strip seniors of their benefits under this program. In the other chamber, Utah Sen. Orrin Hatch recently warned that the House bill "will kill Medicare Advantage plans in rural parts of the country" and that the Senate's version will drive millions of people out of it.
Democrats say they're not trying to kill the program, but they are trying to change it.
Between the House and Senate healthcare bills, they've proposed cutting $120 billion to $150 billion from Medicare Advantage over the next decade. The savings are a major slice of how Democrats intend to pay for reform.
Why the cuts? Right now, many experts say, Medicare Advantage is a case of a good idea gone financially wild. The program is simple enough. Rather than insuring an elderly person directly, the federal government instead pays a private insurer like Humana or Aetna to cover that individual. When this program started decades ago, it actually cost the government less than the standard Medicare option. That's not the case anymore, in part because Congress has increased the payments it gives insurance companies in an attempt to woo more of them into the program. In fact, the government now spends about 15 percent more on each Medicare Advantage enrollee.
For many seniors, the extra government money means more benefits than the regular Medicare plan. It also enables many seniors to avoid buying more-expensive supplemental plans to cover things Medicare doesn't, like some additional tests. "For some people who couldn't afford a supplemental policy, this has become a subsidized version of one," says Marsha Gold, a health policy expert at Mathematica Policy Research.
The question now is how seniors would be affected by the proposed cuts.
"In terms of how insurance plans will respond, it's pretty hard to predict," says Tricia Neuman, director of the Kaiser Family Foundation's Medicare project. "I suppose they could pull out of the program or cut back on some benefits." On the other hand, she says, the proposed bills would help many of the same seniors by covering more of their pricey prescription drugs.
So what will the net effect be? That's something, she says, policymakers will have to watch closely.
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