AHIP: Many Medicare Advantage Enrollees Have Low Incomes

President Johnson signs the Medicare program into law in 1965. (AP Photo) President Johnson signs the Medicare program into law in 1965. (AP Photo)

America's Health Insurance Plans (AHIP) is arguing that much of the money the federal government spends on supporting the Medicare Advantage program ends up helping Medicare Advantage plan enrollees of modest means.

In 2010, about 26% of the U.S. Medicare program participants who had annual incomes under $10,000 signed up for Medicare Advantage plans, and 31% of the participants with incomes from $10,001 to $20,000 signed up for the private plans, analysts at AHIP, Washington, report in a review based on data from the Centers for Medicare & Medicaid Services (CMS).

Medicare Advantage plan coverage was the most popular option after Medicaid for Medicare enrollees with incomes of $10,000 or less, and it was the most popular option for enrollees in the $10,001-$20,000 and $20,001-$30,000 income categories, the analysts say.

For Medicare program participants with incomes over $30,000, employer-based retiree health coverage is the most popular coverage option. Medicare Advantage coverage is the second most popular option for those higher-income retirees.

AHIP is publishing the report as health insurers are defending federal Medicare Advantage program support against attackers who argue that enrollees in the traditional Medicare program are subsidizing the Medicare Advantage plans.

Congress created Medicare Advantage and an earlier version of the program, Medicare plus Choice, to give private health insurers an opportunity to provide alternatives to traditional Medicare coverage for Medicare program participants.

Private carriers fled from the old Medicare plus Choice program because of concerns about changes in program rules, and Congress and CMS tried to make Medicare Advantage more attractive, to lure private carriers back in.

The traditional Medicare program uses deductibles and coinsurance requirements to decrease benefits costs and discourage enrollees from getting unnecessary care. Traditionally, Medicare also has left out features such as dental coverage and vision care coverage.

Medicare Advantage plans give enrollees incentives to use in-network providers. To reward enrollees for accepting limits on provider access, the plans typically charge low or no premiums and may offer much lower out-of-pocket costs than traditional Medicare plans. The private plans also may offer extra features, such as free memberships in exercise programs or free hearing tests.

Critics say the plans are more expensive than the traditional Medicare program and, by minimizing out-of-pocket costs, encourage enrollees to get too much care.

Supporters contend that Medicare Advantage plan enrollees use more care partly because they tend to be sicker than traditional Medicare enrollees, and that many of the extra benefits the private plans provide can help enrollees live longer, healthier lives.

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