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Some Perils of Medicare Advantage Growing, Traditional Medicare Shrinking


Traditional Medicare has been an important proving ground for U.S. healthcare for decades, and Medicare reimbursement has been used to support rural healthcare and medical education. In an opinion piece published by JAMA, Gretchen Jacobson and David Blumenthal of The Commonwealth Fund discuss some of the pitfalls of shrinking enrollment in traditional Medicare as the proportion of beneficiaries in Medicare Advantage plans grows.

About 46% of people eligible for Medicare are enrolled in Medicare Advantage (MA) plan and in the next few years the balance is likely to tip so that more than half of beneficiaries will be in MA plans.

MA has grown for several reasons, some of which can be traced back to the generous payments to the plans and the extras they can offer beneficiaries. The plans say they bring efficiency and coordination to beneficiaries’ health care.

Regardless of the reasons, the shift to MA plans has serious implications for Medicare and overall U.S. healthcare system, Gretchen Jacobson, Ph.D., and David Blumenthal, M.D., M.P.P., argue in an opinion piece published online by JAMA this week.

Here are four of the points they make:

  • Loss of data. Claims and other sorts of data from traditional Medicare has been used by researchers and regulators to assess the quality of healthcare and patterns of usage. As traditional Medicare shrinks, this treasure trove will dwindle and with it, insight and understanding of healthcare covered by Medicare and the healthcare system overall.
  • A smaller, perhaps less reliable proving ground. CMS and its Center for Medicare and Medicaid Innovation have used traditional Medicare and its beneficiaries to conduct a wide variety of value-based programs and policies, including accountable care organizations and bundled payments. As the numbers of beneficiaries in traditional Medicare declines, it will be more difficult to test those programs. Also, the traditional Medicare population may not be as representative of theMedicare population as a whole.
  • Less information about individual clinicians and healthcare providers. Traditional Medicare has allowed researchers, regulators and journalists to “drill down” to individual clinicians and healthcare providers. Jacobson and Blumenthal say MA plans tend to aggregate information from clinicians and providers. That could make it difficult to develop.
  • Funding of rural healthcare, graduate medical education in doubt. Adjustments to payments made through traditional Medicare have been used to support rural healthcare centers and graduate medical education. And, broadly speaking, Medicare reimbursement is a lever that the federal government can use to accomplish public policy goals. A MA-dominated system raises questions about how Medicare would work through the MA plans to achieve the public purposes Medicare has served, note Jacobson and Blumenthal wrote.

Developments in healthcare often take policy makers by surprise, observe Jacobson and Blumenthal. But the migration of an increasing proportion of Medicare beneficiaries into MA plans is a long-term trend.

“While meeting the challenge created by the decline in enrollment in traditional Medicare will raise important issues about roles of regulation and competition in Medicare Advantage,” wrote Jacobson and Blumenthal, “it would be better to confront and resolve those issues now, before traditional Medicare can no longer function to effectively inform the management of the healthcare system.”

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