Under the Medicare reform law, the government is paying private managed-care plans in Medicare Advantage an average of 8.4% more than it would cost to treat the same patients in the traditional fee-for-service program, according to a new report by the Commonwealth Fund.
The difference amounts to an average of $552 more for each of the 5 million Medicare beneficiaries enrolled in Medicare managed-care plans, or a total of $2.75 billion in 2004, the report said.
The analysis updates a report issued in April by the Medicare Payment Advisory Commission, which pegged the difference at 7%.
The higher payments are aimed at increasing participation in the Medicare managed-care program, by both health plans and beneficiaries, which supporters say will help lower Medicare costs over the long run. But according to the Commonwealth report, "private plans will not reduce Medicare costs in 2004 and the remainder of the decade," and are actually expected to add $14 billion to $46 billion in costs over the next 10 years.
Read the report.