Medicare Advantage vs. Medicare For All


A new twitter campaign led by The Coalition for Medicare Choices promises to mobilize two million seniors to “preserve and strengthen” Medicare Advantage. But who is the Coalition for Medicare Choices? With Medicare Advantage now covering 33% of Medicare enrollees, what does the state of Medicare Advantage plans mean for the fight for National Improved Medicare for All?

Medicare Advantage, also known as Medicare Part C, allows elderly and disabled Americans to choose between “traditional” Medicare (fee-for-service) and private healthcare HMO plans. The initial idea behind Medicare Advantage was based on a belief that allowing private sector HMOs to have a slice of the Medicare pie would offer better consumer choices and reduce prices. A more cynical explanation would categorize Medicare Advantage as the privatization of an essential government service, with the primary aim of producing large profits for the corporations involved.

Over the last few decades, insurers participating in Medicare Advantage have schmoozed Congress into compensating them with more money per person than is allocated to traditional Medicare. Don McCanne of Physicians for a National Health Program writes: 

“Each year the administration, whether Democratic or Republican, uses quirky arcane rules to ensure an adequate revenue buffer so that private insurers can compete favorably with the traditional Medicare program by offering lower premiums and cost sharing and expanded benefits… Once a critical mass has enrolled in private plans, Congress will gradually reduce the relative value of the voucher-equivalent, reducing the government component of the funding of Medicare by shifting more costs to the Medicare beneficiaries.”

We see this happening right now, with top leaders of Republican Party expressing a strong interest in cutting Medicare. In response, physician advocates argue that the private Medicare Advantage HMOs should be isolated as a source of wasteful government spending, and that benefits offered by these plans should be expanded into traditional Medicare.  Physicians for a National Health Program (PNHP), the doctor-led think tank for single payer policymaking, has been putting forward a strong case against Medicare Advantage for some years

PNHP points to a number of studies that show the Medicare Advantage HMOs cherry pick healthy patients and lemon drop expensive, unhealthy ones. This is done through narrow coverage networks and poor access to specialized care , driving patients with heavy medical burdens into traditional Medicare – where they can choose their own providers.  A 2015 Brown University study  showed that  of Medicare Advantage patients who had long-term stays in nursing homes,  17% switched to traditional Medicare the next year. The report’s lead author, Momotazur Rahman, told NPR news that there are incentives, including “steep cost-sharing as patients need more expensive care” and “limitations on expensive treatments”,that because sick patients to drop out of Medicare Advantage plans. A 2017 Government Accountability Office (GAO) report found that of 126 Medicare Advantage plans, 35 plans saw disproportionally high numbers of sick enrollees dropping out into traditional Medicare.

In 2017, a Kaiser Family Foundation (KFF) study found one out of every three Americans enrolled in Medicare Advantage plans were given narrow physician networks. It concluded that plans offering broader networks tended to have much higher premiums than narrow-network plans. KFF also found that one out of every five plans do not include a regional academic medical center in their networks, and estimated that 40% of Medicare Advantage networks included top-quality cancer centers. 

The Medicare Advantage insurers can also increase their profits by upcoding the severity of the diseases that their patients have.  HMOs are paid per capita based on the number of patients they cover.  The payments are also risk adjusted according to the severity of the illnesses of those covered: the more severely ill, the higher the compensation. So it is to the Medicare Advantage plans’ advantage to upcode, to make patients seem sicker.   Investigations by the Center for Public Integrity and the work of academics show that there is both direct and indirect evidence of massive upcoding in Medicare Advantage, costing the government and taxpayers tens of billions of dollars.     

While Medicare Advantage is not an efficient or an equitable means of offering care to senior and disabled Americans, it’s important to look into some of the benefits that satisfied patients (who tend to be healthy) are grateful for. All of these benefits would be offered (and enhanced) through a national health insurance system like National Improved Medicare for All (NIMA).

NIMA would eliminate copays, narrow networks and provide long-term care, bringing both sick and healthy Americans into the same risk pool while extending that pool to include everyone. There is a growing consensus that Medicare Advantage, while masqueraded as offering better choices to patients about the type of care they receive, doesn’t extend those choices to sicker enrollees. 

Too often, privatization of essential public services is framed as an opportunity to offer better consumer choices and a reduction in costs. The irony of the relatively skimpy proposals put forth by the Campaign for Medicare Choices is that National Improved Medicare for All would actually give seniors and disabled Americans more choices than Medicare Advantage does, with the addition of long-term care, dental care and other essential medical services.

What is the Campaign for Medicare Choices fighting against? It’s not the movement for Medicare for All – yet. The real motivation is a very modest reduction in government subsidies for private Medicare Advantage plans, which are already inflated well above real costs to the point of making these insurance companies record profits. What this initiative is doing is picking up on the very real fears of Medicare coming under threat and redirecting it to protect corporate interests. Meanwhile, Republicans in Congress are pushing for substantial cuts to Medicare and Medicaid. As advocates for a system that provides healthcare as an essential human right, our attention is better focused on resisting this agenda and demanding National Improved Medicare for All.