The privately managed Medicare Advantage does a better job, though it could use improvement.
Democrats enamored by the idea of Medicare for All should keep in mind that the standard existing Medicare benefit package falls well short of what they are proposing. If Medicare were a private insurance plan, it wouldn’t even qualify as adequate health insurance on the Affordable Care Act’s exchange. Medicare currently leaves enrollees who lack supplemental coverage exposed to potentially catastrophic out-of-pocket expenses and steep deductibles for prescription drugs—one of the primary political concerns of seniors.
There’s a solution that doesn’t involve undermining drug innovation or imposing extra costs on taxpayers. Medicare Advantage, which pays for a beneficiary’s private insurance plan, insures patients at lower cost than traditional Medicare, which pays hospitals and physicians directly. It also produces consistently better health outcomes.
The companies that offer Medicare Advantage plans have an incentive to prevent costly hospitalizations because they are responsible for the full range of enrollee medical costs. Medicare Advantage enrollees were also significantly likelier than traditional Medicare beneficiaries to receive appropriate diagnostic tests, preventive care services, and help managing their prescription medications. The annual mortality rate of Medicare Advantage enrollees is much lower than those enrolled in traditional Medicare, and the disparity can’t be explained by differences in medical risk factors alone.
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