The Future of Medicare Advantage

Many seniors have Medicare Advantage, but few understand it and how it came to be that Original Medicare is being replaced by Medicare Advantage.

I have written about Medicare Advantage before, so a brief refresher is needed here to understand what is happening in the government and that they want to eliminate it or reduce benefits. 

Medicare Advantage is private insurance providing medical and hospital services in place of Original Medicare. (As a point of reference, Original Medicare is the only insurance without a maximum out of pocket. I have searched through many documents and cannot find a reasonable explanation as to why no maximum out of pocket.). Nevertheless, it is a fact.

Medicare Advantage came about from private insurance to replace Original Medicare with plans that have more benefits with little or no monthly premium and a reasonable maximum out of pocket. There are 27 million seniors in Medicare Advantage nationwide.

What most Americans aren’t aware of is that Medicare Advantage saves the government money. There are 6,000 counties in the US and the government does an annual actuarial study by county to determine how much they spend on each Original Medicare recipient. In Clark County, NV the government determined that they spend around $1100 per month per Original Medicare recipient. They then give the various Medicare Advantage insurance companies around $900 per month per recipient. That saves the government $200 per month for every Medicare Advantage client in Clark County Nevada. Since there are over 140,000 Medicare Advantage clients in Clark County that is a substantial amount of money the insurance companies receive monthly. Multiply that by 6000 counties and it is easy to see why Medicare Advantage works for so many. (27 million seniors nationwide on Advantage plans)

With that money, the insurance companies that offer Medicare Advantage can offer much more feature-rich plans than Original Medicare. For many seniors, this is an inexpensive way to have Medicare medical services without having a large out-of-pocket expense. As we age, we all develop medical issues that need resolving. The Medicare Advantage plans offer that and more to their clients. 

In a recent article, I read where Congress is considering reducing the money it gives to Medicare Advantage insurance companies because they need the money for other government expenditures. Talk about being short-sighted. Medicare Advantage saves the government money and Congress wants to cut the plans to spend elsewhere. This is not a political comment, it is factual, and this blogger is against the government cutting Medicare Advantage money. Please remember, each Medicare Advantage client is saving the government 80% of their medical bills because Original Medicare isn’t spending that money to pay claims. They are paying the Advantage insurance companies less money than would have been spent on Original Medicare. Do the math yourself. 140,000 Medicare Advantage clients in Clark County NV times 6000 counties, or about 27 million seniors in the US adds up to a lot of money being saved using Medicare Advantage.

Each senior on Medicare Advantage needs to take a proactive stance and notify their Congressional representatives that they want Medicare Advantage to remain an option for Medicare recipients. If enough seniors talk to their representatives, these representatives should understand that any bill that eliminates or curtails Medicare Advantage would be considered anti-senior. Seniors as a demographic group vote more than any other group so we do have clout with our representatives. Please understand that standalone drug plans, in addition to MAPD plans are considered Medicare Advantage. Those seniors on standalone drug plans have as much to lose as those on MAPD plans. So, it affects almost every senior. We need to stand up and be heard. This is not political but seniors standing up for their rites. 

Call or write your Congressional representatives in both houses of Congress that you want MAPD and standalone drug plans to remain as options for seniors and a vote to eliminate them would be considered anti-senior and we will not tolerate that.

Len Barend, broker

The Barend Agency Inc.


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