Dive Brief:
- Despite cuts to Medicare spending five years ago that were expected to upset private Medicare options and enrollment, membership in Medicare Advantage plans has actually skyrocketed in that time by more than 50%, The New York Times reports.
- At the time, opponents argued the cuts -- made to help support the Affordable Care Act -- would “gut” the program and the Congressional Budget Office predicted a 30% drop in enrollment.
- Instead, enrollment has risen from 11 million to 17 million as almost a third of Medicare beneficiaries select private plans over the traditional Medicare program.
Dive Insight:
Some healthcare experts are comparing the vastly different Medicare Advantage program to the ACA marketplaces to look for possible lessons on why the former is so much more appealing and successful for insurers than the latter.
It comes down to multiple issues around money and politics, as Medicare Advantage has enjoyed higher revenue per member then ACA plans and predictable profit margins despite the spending cuts. Meanwhile, the ACA marketplaces have lacked the political support necessary to promote stability.
The other major factor is the lack of knowledge of previously uninsured ACA plan customers compared to Medicare customers, experts say, which led to insurers' poor predictions of how much healthcare the new members would utilize and a lack of knowledge about how they would behave in the volatile marketplace.
“Even with all the cutbacks in the Affordable Care Act, there is still a decent opportunity for insurance companies to make a profit in the Medicare Advantage program,” The New York Times quoted Richard S. Foster, the former chief actuary of the Medicare program. “The marketplace under the Affordable Care Act will calm down over time but may not ever be as stable and predictable as Medicare Advantage.”