Medicare Advantage Plan cost to taxpayers

Medicare Advantage Plans Cost $8.5 Billion More than Traditional Medicare in 2008
Private Medicare Advantage (MA) plans will be paid an average 12.4 percent more per enrollee in 2008 compared to what the same enrollee would have cost in the traditional Medicare fee-for-service program. The cost to Medicare, according to a new report from The Commonwealth Fund, will be $8.5 billion in 2008, pushing the extra cost from 2004 to $33 billion.

Even if the payment reductions to MA plans mandated by the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) – scheduled to take effect beginning in 2010 – had been fully in place in 2008, MA plans still would have been paid 10.6 percent more than expected fee-for-service costs.

Extra payments to MA plans will amount to $986 over fee-for-service costs for each of about 8.7 million Medicare beneficiaries enrolled in Medicare Advantage plans, according to the estimate by Brian Biles, professor of health policy at George Washington University, and colleagues.

The total will be more than $8.5 billion in 2008 – up from $3.9 billion in extra payments, or $795 per MA enrollee in 2004. Extra payments to MA plans between 2004 and 2008 will total nearly $33 billion.

The bulk of these extra payments were mandated by the Medicare Modernization Act of 2003, which was intended to expand the role of private plans in Medicare in an effort to reduce growth in Medicare spending. Since 2004, MA plan enrollment has increased from 4.8 million to the current 8.7 million.

Read Full Article (SeniorJournal.com)