The passage of the Affordable Care Act represents an historic change in the way health insurance has been handled in the United States. With political discourse about the act continuing to occupy public policy debates and the news media, this collection attempts to shed light on the impact of the policy on citizens and providers as well as examine how the ACA is affecting quality, access, and costs of care.

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Do Medicare Advantage Plans Respond to Payment Changes? A Look at the Data from 2009 to 2014

March 14, 2018

Issue: Medicare Advantage (MA) enrollment has grown significantly since 2009, despite legislation that reduced what Medicare pays these plans to provide care to enrollees. MA payments, on average, now approach parity with costs in traditional Medicare.Goal: Examine changes in per enrollee costs between 2009 and 2014 to better understand how MA plans have continued to thrive even as payments decreased.Methods: Analysis of Medicare data on MA plan bids, net of rebates.Findings: While spending per beneficiary in traditional Medicare rose 5.0 percent between 2009 and 2014, MA payment benchmarks rose 1.5 percent and payment to plans decreased by 0.7 percent. Plans' expected per enrollee costs grew 2.6 percent. Plans where payment rates decreased generally had slower growth in their expected costs. HMOs, which saw their payments decline the most, had the slowest expected cost growth.Conclusions: In general, MA plans responded to lower payment by containing costs. By preserving most of the margin between Medicare payments and their bids in the form of rebates, they could continue to offer additional benefits to attract enrollees. The magnitude of this response varied by geographic area and plan type. Despite this slower growth in expected per enrollee costs, greater efficiencies by MA plans may still be achievable.

Why Does Medicare Advantage Work Better Than Marketplaces?

January 30, 2018

Medicare Advantage (MA) markets are significantly more robust, with higher private insurer participation and lower average premium growth than the Affordable Care Act (ACA) marketplaces. The programs differ in insurer participation, the risk-adjustment system, and provider payments.Key FindingsBased on MA's success relative to the ACA marketplaces in terms of marketplace strength and long-term stability, there are five policies that could be useful for the ACA marketplaces:Raise enrollment in marketplace plans by increasing premium and cost-sharing subsidies and eliminating short-term plans;Cap provider payment rates at Medicare rates or a fixed percentage above them;Standardize cost-sharing within metal tiers, or limit the number of plan designs available;Lift the budget neutrality requirement for risk adjustment in the marketplaces; andUse a higher benchmark than the second-lowest-cost silver plan for calculating premium tax credits. ConclusionMA's success lays out a possible model for the ACA marketplaces. By adopting policies geared towards increasing enrollment in marketplace plans as well as insurer participation, the ACA marketplaces could become stronger and more stable.