DAVID HOGBERG: Medicare Advantage Reduces Healthcare Costs For Seniors

For Medicare Advantage enrollees, the open enrollment period during which they can switch their Medicare Advantage plans began Oct. 15.

Medicare Advantage is the program through which seniors and other beneficiaries can receive their Medicare benefits from a private insurance company. The plans are popular. Nationwide, 54% of Medicare beneficiaries are enrolled in an MA plan, and less than 4% change their plan during open enrollment.

Unfortunately, MA plans have come under increasing fire from politicians on both sides of the aisle.

Earlier this year, Rep. Lloyd Doggett (D-TX), referred to the program as “Medicare Disadvantage,” saying it is “straining our health care system and threatening consumers’ access to necessary health care.”

Rep. Greg Murphy (R-NC) accused insurers of having “bastardized the system.”

These attacks on Medicare Advantage are myopic because MA plans save money for both beneficiaries and taxpayers.

A new study from the UCLA Center for Health Policy Research finds that MA plans reduce healthcare costs for seniors. It examined counties in California and found that counties with an MA enrollment rate at 20% or above had average monthly healthcare costs of $273. By contrast, seniors in counties with MA enrollment lower than 20% had an average monthly cost of $557. Counties with higher MA enrollment saw an 11% increase in monthly healthcare costs over the decade from 2013 to 2023, while counties with lower enrollment saw a 54% increase.

The study also found that healthcare costs actually declined when the number of enrollees rose from below 20% to above it. From 2013 to 2023 that happened in five counties, Amador, Kings, Santa Cruz, Tulare, Yuba. Monthly healthcare costs for seniors dropped in each of those counties over that time, with the average cost falling from $522 to $281. That’s a clear cost benefit for seniors, in a state with a famously high cost of living.

The news comes against the backdrop of existing evidence that MA is better at saving taxpayers money than traditional Medicare. A study by the research firm Avalere found that if traditional Medicare performed as well as MA, the Medicare trust fund would be solvent for an additional 17 years.

One reason for that is MA plans are better at managing costs. Managing costs also benefits enrollees. MA plans reduce out-of-pocket costs like co-pays and cost-sharing. The inclusion of vision, dental and prescription drug coverage also helps, because things like dental problems or lack of medication adherence can result in other costly conditions that both MA and traditional Medicare have to cover.

Fortunately, many politicians recognize the value of MA plans. In early 2024, multiple senators signed a letter calling on Centers for Medicare & Medicaid Services to “sustain and strengthen Medicare Advantage.” This included conservatives like Tim Scott (R-SC) and Ted Cruz (R-TX) and liberals like Amy Klobuchar (D-MN) and Chuck Schumer (D-NY). Notably, Alex Padilla, one of the senators from California, also signed the letter, likely because 56% of those eligible for Medicare in the Golden State are enrolled in an MA plan—and, as the UCLA study shows, MA has helped keep costs low for many of his constituents.

MA plans are popular with seniors because insurers compete for their business by lowering costs while maintaining quality. Politicians should leave the program alone.

David Hogberg is an independent writer living in Washington, DC. Subscribe to his Substack, The Sowell Man.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.

(Featured Image Media Credit: Screen Capture/PBS NewsHour)