How Medicare Advantage Political Support is Shifting

How Medicare Advantage Political Support is Shifting

March 11, 2024

By Grace Totman, co-head of Capstone’s healthcare practice

Medicare Advantage, the privatized version of Medicare, has experienced unprecedented growth in the last few years and is now home to the majority of seniors. This surge in popularity has forced lawmakers, seniors, and their families to reconsider the program’s effectiveness, its pros and cons, and whether the growth is encouraging or alarming.

More than 50% of seniors are now enrolled in Medicare Advantage… However, political sentiment is shifting.

Medicare Advantage aims to reduce costs by outsourcing seniors’ healthcare management to private insurers. Insurers receive a flat fee based on the expected cost of each patient. If a patient’s costs exceed this fee, the insurer bears the additional expense, but if the costs are lower, the insurer retains the difference. This incentivizes insurers to invest in preventive care, minimizing costly emergency room visits.

The flat fee is risk-adjusted to reflect each patient’s expected expenses, considering factors such as age and health conditions. However, this system can lead insurers to overstate patients’ health issues while simultaneously attempting to keep costs down.

Strategies like prior authorization – requiring pre-approval from the insurer before seeing a new specialist or getting a new medication- are employed to manage expenses efficiently. This approach makes sense when done right. Most patients have no idea what type of healthcare they really need, and the whole idea of Medicare Advantage is to deliver healthcare more efficiently than letting seniors see their favorite cardiologist weekly. But I must admit, I’ve thought about prior authorization a bit differently recently. My parents are approaching Medicare age, and they’ve asked my opinion: Medicare Advantage or Traditional Medicare? The Medicare Advantage analyst in me says it’s the obvious choice. Their out-of-pocket spending would be capped, drug benefits included, and hearing, vision, and dental coverage available in a “one-stop” fashion. But what if my dad wants to see a cardiac specialist, just for peace of mind?

More than 50% of seniors are now enrolled in Medicare Advantage, a testament to the willingness of most individuals to make this trade-off. However, political sentiment is shifting. Republican lawmakers, once staunch supporters unwilling to criticize the program, now acknowledge the potential for fraud, waste, and abuse and the need for fringe reforms. The sentiment has shifted from no reform needed to reforms to ensure the long-term sustainability of the program. Conversely, Democratic lawmakers, who initially labeled the program as a privatization of Medicare, are adapting their views as more seniors, particularly those from minority populations, opt-in. At a Capstone Healthcare Policy Day in February 2024, a Democratic Senate office told us that the share of seniors in their state in the program had skyrocketed from 20% just a few years ago to over 50% today, forcing the entire office to reevaluate their support.

This surge in popularity has forced lawmakers, seniors, and their families to reconsider the program’s effectiveness.

Capstone believes we are entering a new era of Medicare Advantage political sentiment, with Republicans reevaluating their once unwavering support and Democrats forced to endorse the program, or at least its existence in some form. While this may offer a more balanced support structure, it will likely come with trade-offs. Congressional scrutiny and reforms are on the horizon— reforms that will have implications for Medicare Advantage insurers, like Humana, UnitedHealth, and CVS. Capstone will, of course, be closely watching all of the above.

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