“Empty promises may be of little concern to some, but they have real consequence for the Americans who expect us to do no harm,” said Rep. Fred Upton (R-Mich.), the committee chair. “Americans deserve to know why their existing coverage is changing when they were promised otherwise.”
But Democrats chafed at that characterization of the changes to the Advantage program. They argued that the private Medicare managed-care program had been chronically oversubsidized and that the reductions had helped bolster the long-term financial viability of Medicare overall. Many nonpartisan experts had called for Advantage payments to be reduced.
Rep. Frank Pallone Jr. (D-N.J.), the ranking minority member of the Health Subcommittee, criticized his GOP counterparts for spreading “myths” about the federal healthcare law. “The Republicans basically think the Affordable Care Act is the end of the world,” Pallone said.
It was widely predicted that cuts to the Advantage program—$117 billion over 10 years, according to the Congressional Budget Office—would lead to reductions in the number of seniors choosing private plans. But since passage of the ACA, double-digit enrollment growth has continued. Currently, 28% of individuals eligible for Medicare—or roughly 14 million people—are enrolled in private plans. Prior to passage of the federal healthcare law, per-beneficiary costs for individuals enrolled in MA plans were 14% higher than for traditional Medicare enrollees. That disparity has since been reduced to 4%, according to the Medicare Payment Advisory Commission.
A recent study by the Kaiser Family Foundation found that Advantage customers will have an average of 18 plans to choose from for 2014 coverage. That's down from an average of 20 choices in 2013. The open enrollment period for Medicare closes on Dec. 7.
The five experts that testified at the hearing—and legislators from both sides of the aisle—were united in praising Medicare Advantage as an integral piece of the Medicare program for seniors. But they diverged on whether the cuts in the ACA will imperil the program in future years.
Douglas Holtz-Eakin, a former director of the Congressional Budget Office who is now president of the conservative American Action Forum, warned that cuts will inevitably lead to reductions in enrollment, fewer provider options and, ultimately, a lower quality of care. “To judge it by 2013 or 2014 is a mistake,” Holtz-Eakin said. “It is the trajectory over the foreseeable future that concerns me the most.”
But Joe Baker, president of the Medicare Rights Center, praised changes to the Advantage program under the healthcare reform law, such as requiring that 85% of premium revenue be used for medical care. He argued that it's misleading to blame the ACA for changes to provider networks. “We must stress that we see this every year,” Baker said. “Changing provider networks are an inherent risk of any managed-care system.”
The politically fraught provider network issue is not likely to go away. Republicans are hitting hard at the issue of major Medicare Advantage insurers such as UnitedHealth Group and Humana terminating physicians from their networks in a number of states. They also are blasting away at narrow-network health plans being offered to non-Medicare customers by insurers on the state insurance exchanges. Insurers say they are tightening their hospital and physician networks as one way to keep premiums down. Provider groups are complaining loudly about these moves.
On Tuesday, Minnetonka, Minn.-based UnitedHealth told investors that it expects to take a $1.1 billion hit to profits in 2014 because of the ACA, blaming much of the reduced revenue on MA cuts.
Rep. Thomas Burgess (R-Texas), vice chair of the Health Subcommittee, suggested that the healthcare law never would have passed if Obama had leveled with the public about the changes it would unleash. “The president has sold the Affordable Care Act on a raft of false promises,” Burgess said.
Other observers point out, however, that Republicans have long advocated a system of greater competition between health plans and between providers—with consumers having a broad choice of plans—and that's exactly what's playing out right now.
Follow Paul Demko on Twitter: @MHpdemko
