Although statistics show Medicare Advantage (MA) plans have lower overall medical costs than traditional Medicare plans, the impact on taxpayers slightly more ambiguous, according an article in the Journal of the American Medical Association (JAMA).
MA enrollment has increased considerably over the past five years despite concerns that funding cuts would gut the program. Part of the draw for consumers is the option for more substantial coverage than traditional Medicare plans with similar premiums and out-of-pocket costs. Last year, overall medical costs within MA plans were 6 percent lower than traditional Medicare, writes Austin B. Frakt, Ph.D., a health economist with the Department of Veterans Affairs.
The cost to taxpayers is more opaque, particularly given the recent concerns of upcoding within MA plans. Last year, previously undisclosed government audits surfaced indicating that inflated risk scores cost the government millions in improper payments. An investigation published by the Center for Public Integrity in 2014 found that MA plans were linked to more than $70 billion in improper payments between 2008 and 2013, while others have estimated inflated risk scores cost the government an estimated $2 billion each year.
However, recent studies show the surge in MA enrollment has as spillover effect, driving down traditional Medicare plans, which could offset the additional taxpayer burden associated with MA plans.
To learn more:
- read the JAMA article