Biden Sabotages Medicare Advantage
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Bobby Jindal writes last the WSJ:
President Biden accuses Republicans of seeking to cut Medicare. In his 2025 budget proposal to Congress, Mr. Biden vowed to “reject any efforts to cut or undermine the Medicare or Social Security benefits that seniors and people with disabilities have earned and paid into their entire working lives.” That’s a noble promise, but Mr. Biden’s own administration is undermining Medicare’s most popular and effective program: Medicare Advantage.
This year, the number of Medicare Advantage plans available to seniors decreased nationwide. In Alabama, Louisiana and New Mexico, the number of plans available decreased more than 20%. At the same time, Medicare Advantage plans have become significantly more expensive on Mr. Biden’s watch. In 2023 the average Medicare Advantage beneficiary experienced a 12% increase in deductible and a 5% increase in premiums. In Florida, Utah and Wyoming, premiums increased by more than 50%.
Medicare Advantage is getting worse because the Biden administration has introduced subtle changes that are steadily sabotaging the way the program functions.
Every year, the federal government pays health insurers that manage Medicare Advantage plans a fixed sum for every senior they cover. This amount is based on how much Medicare estimates the average senior’s healthcare costs will be. If the insurer can deliver care at a lower cost than Medicare’s payments, both the insurer and the beneficiary share in the savings. But if the health plan spends more than this amount, the insurer loses money and patients must spend more on premiums. Not surprisingly, the health insurers that deliver better care at a lower cost attract more seniors and are more financially successful.
The Biden administration is quietly eroding this important program. The agency in charge of Medicare has severely underestimated the actual expected cost of care for Medicare beneficiaries in 2025. Medicare’s own trustees estimate that seniors’ healthcare costs will increase more than twice as much as Centers for Medicare and Medicaid Services’ estimates in their payment announcements.
These functional cuts threaten to weaken one of the most effective healthcare programs the federal government operates. Unlike traditional Medicare beneficiaries, seniors in Medicare Advantage have greater access to preventive care such as cancer screenings, blood-sugar tests and statin therapy. As a result, Medicare Advantage patients have 25% fewer preventable hospital admissions and 70% fewer readmissions than seniors in traditional Medicare.
Medicare Advantage delivers these extraordinary outcomes while costing seniors and taxpayers significantly less than traditional Medicare. Seniors in Medicare Advantage plans spend $2,400 less on premiums and out-of-pocket costs than seniors on traditional Medicare. Because of these successes, more than half of seniors choose Medicare Advantage to meet their medical needs. Traditional Medicare’s trust fund would remain solvent for 17 additional years if the program cared for its beneficiaries as effectively as Medicare Advantage.
Instead of tearing Medicare Advantage down, policymakers should build on what makes it great. The program works because it rewards insurers when they deliver better care at a lower cost. Policymakers can build on these patient-centered forces by empowering health insurers to bid against one another to determine the payment level the Medicare Advantage plans receive. The payment level would be based on the average bid, or could be set at a lower amount, such as the second lowest bid to increase savings to taxpayers.
This premium-support approach would allow seniors to benefit from efficient plans with lower premiums and extra benefits. Or they could choose more-expensive plans. Insurers that bid lower would deliver more savings, attract more seniors and financially succeed in the Medicare Advantage marketplace. Insurers that bid higher would cost seniors more, lose customers and perform worse financially. Taxpayers and seniors would benefit from the efficiency produced by competition and innovation.
This reform, known as competitive bidding, would deliver substantial savings to seniors and taxpayers alike. The Congressional Budget Office estimates that bringing competitive bidding to Medicare, if it included the government-run plan, would save taxpayers between $184 billion and $419 billion over five years, depending on whether the payment is set by the average bid or the second lowest bid.
Policymakers should consider other important changes to strengthen Medicare Advantage’s capacity to care for seniors. Lawmakers should provide seniors with a direct cost estimate of Medicare Advantage plans vs. traditional Medicare so they can make an informed choice. Policymakers could also autoenroll seniors in Medicare Advantage when they turn 65.
Medicare Advantage should be celebrated, not attacked, for achieving what most healthcare programs have promised and failed to do for decades: deliver high-quality care at an affordable price.
Mr. Jindal served as governor of Louisiana (2008-16) and as a U.S. assistant secretary of Health and Human Services from (2001-03). Mr. Katebi is deputy director of the Center for a Healthy America at the America First Policy Institute.
