Medicare Advantage (MA) programs have become very popular among seniors over the last several years. However, recent studies have largely found that Medicare Advantage plans cost the government and taxpayers more than traditional Medicare per beneficiary. In 2023, that additional cost was about 6 percent.
According to the Center for Economic and Policy Research, Medicare Advantage has never saved taxpayers money as a substitute for Traditional Medicare. In fact, according to the Medicare Payment Advisory Commission (MedPAC), taxpayers have spent more on financing MA than they would have if everyone were covered under Traditional Medicare.
Because of that, Congress and CMS have been working to try to stop MA companies from gaming the system to steal taxpayer money. A 2023 study by the Physicians for a National Health Program (PNHP) estimates that CMS overpaid MA plans between $88-$140 billion in 2022 alone through various practices like pretending patients were sicker than they were along with targeting healthier, less costly seniors to enroll in their plans. Overpayments have also caused all Medicare beneficiaries to pay billions in higher Medicare Part B premiums.
Now, major MA insurers are planning to slash benefits in an attempt to improve profits.
Humana and CVS, two of the largest Medicare Advantage insurers in the country, are poised to seriously downgrade their plan benefits and geographic presence next year as they chase profits in the privately run Medicare program.
As a result, hundreds of thousands of Medicare Advantage seniors — and the billions in revenue they represent — could come up for grabs, representing a significant opportunity for insurers looking to take on more members despite ongoing challenges in MA.
The size of the turnover depends on a number of factors. Experts say deciding which benefits to cut versus keep is a tough calculus, and there are guardrails from the federal government limiting cutbacks.
TSCL strongly recommends that seniors enrolled in Medicare Advantage programs be on alert for changes to their current MA plan and what other MA plans offer when the Medicare open enrollment season arrives later this year.
