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Medicare Advantage vs. the Romney-Ryan plan

 

On the campaign trail, Mitt Romney now says that his plan to transform Medicare is pretty much the same as Medicare Advantage.

"The plan that I've put forward is a plan very similar to Medicare Advantage. It gives all of the next generation retirees the option of having either standard Medicare, a fee-for-service-type, government-run Medicare, or a private Medicare plan," he told reporters today.

Payment reductions to Medicare Advantage also represent a sizable portion of the $716 billion in Medicare cuts under the federal health-care law -- which Republicans have used to attack President Obama (but which also were assumed in running mate Paul Ryan's budget).

So what is Medicare Advantage? Is it indeed similar to the Romney’s plan for Medicare? And what did the 2010 cuts to Medicare Advantage represent? Here are some answers:

Medicare Advantage is an alternative to Medicare, whereby seniors get their health-care benefits through private plans instead of the government. As the Washington Post reported in 2009, these plans tend to offer extra services like free gym memberships, free hearing aids, or even free blood-pressure machines.

According to the Kaiser Family Foundation, about 25% of Medicare recipients (12 million) are enrolled in Medicare Advantage.

But the reason why the program saw cuts in the 2010 health-care law is due to its shortcoming: It's not as cost-efficient as traditional Medicare.

Under Medicare Advantage, the Kaiser Family Foundation says, Medicare ends up paying the private plans MORE per enrollee -- about 7% more -- than the fee-for-service program does.

"It's a wasteful, inefficient program and always has been," Sen. Jay Rockefeller (D-WV) told the Washington Post in 2009. It's "stuffing money into the pockets of private insurers, and it doesn't provide any better benefits to anybody."

And what's the difference between Medicare Advantage program and the Romney-Ryan plan to overhaul Medicare? It comes down to the voucher or premium support.

Under Medicare Advantage, Medicare pays a fixed monthly amount to the private insurers for a senior's care.

But under the most recent version of running mate Paul Ryan's budget plan -- which Romney has essentially adopted -- future seniors would receive a voucher (or premium support) from the federal government to purchase private insurance or to gain access to the traditional Medicare model.

"In the premium support system, which younger people get when they turn Medicare- eligible, 54 and below, they'll have a traditional Medicare program option along with the guaranteed coverage options they have to choose from," Ryan told Fox News in March.

Yet according to Marsha Gold, a health-care expert at Mathematica Policy Research, the big difference between the two is this: Medicare Advantage, like Medicare, is a defined benefit (where the government guarantees a level of coverage), while the Romney-Ryan plan transforms Medicare into a defined contribution (where the government decides what it will pay).

Indeed, in 2011, the Congressional Budget Office said the Ryan plan -- which didn't provide the choice of remaining in Medicare -- would force most seniors to pay MORE for their health care than under the current Medicare system.