Brian Biles, Lauren Hersch Nicholas, Stuart Guterman
B. Biles, L. Hersch Nicholas, and S. Guterman, Medicare Beneficiary Out-of-Pocket Costs: Are Medicare Advantage Plans a Better Deal?, The Commonwealth Fund, May 2006
For slides and audio from an Alliance for Health Reform event, "Medicare Advantage: Early Views and Trend Spotting," including a presentation by issue brief author Brian Biles, check out our Fund E-Forum.
The creators of the Medicare Advantage (MA) program envisioned that seniors would opt out of fee-for-service Medicare to take advantage of the lower premiums, lower cost-sharing, and additional benefits available in private plans. Earlier research, however, indicates that out-of-pocket costs for MA enrollees vary widely by health status and plan benefit package. This issue brief examines out-of-pocket costs for beneficiaries in good, fair, and poor health throughout the country. In 2005, annual out-of-pocket costs for plan members ranged from under $100 for beneficiaries in good health to over $6,000 for those in poor health. Costs for beneficiaries in poor health would actually have been higher than fee-for-service in 19 of the 88 MA plans examined. Despite the high payments, relative to fee-for-service costs, that MA plans receive from Medicare to enrich enrollee benefits, these plans may not always be a good deal for sicker beneficiaries who use more health services.