Time to Change My Mind: The Quality of Medicare Advantage: Wednesday Focus for August 20, 2014
I used to think (and say) that there was one clear place where low hanging fruit in healthcare cost control could be obtained: we had tried Medicare Advantage–putting Medicare patients into HMOs–and it turned out that they cost the federal government more money when we did that, and the patients were less satisfied and did worse. Medicare HMOs thus looked like a bad bet for the health care system of the future, and one that we should not make.
But now comes Austin Frakt, who convinces me that it is clearly time to change my mind: Medicare Advantage–Medicare HMOs–are, it turns out, looking good enough that we should let our bet on it ride for a while…
Austin Frakt: The quality of Medicare Advantage: “Medicare Advantage plans…
…underperform traditional Medicare in one respect: They cost 6 percent more. But they… offer higher quality… according to research summarized recently by… Joseph Newhouse and Thomas McGuire…. In the early 2000s,Medicare Advantage plans also cost taxpayers more than traditional Medicare… [and] provided poorer quality…. MedPAC found that relatively healthier beneficiaries were switching into Medicare Advantage and relatively sicker ones were switching out. This suggested that Medicare Advantage didn’t provide the type of coverage or the access to services that unhealthier beneficiaries wanted or needed. Since the point of insurance is to pay for needed care when one is sick, it was tempting to condemn the program as having poor quality and failing to fulfill a basic requirement of coverage.
But things have changed…. [By 2007] sicker beneficiaries were not switching out of Medicare Advantage and healthier ones were not switching in… [and] Medicare Advantage is superior… on a variety of quality measures… more likely to receive mammography screenings… blood sugar testing and retinal exams… cholesterol testing… flu and pneumonia vaccinations… about as likely to rate their personal doctor and specialists highly….
Is Medicare Advantage worth its extra cost? A decade ago… the answer was easy: No. Today one must think harder…. Newhouse and… McGuire hedge but lean favorably toward Medicare Advantage…
It would be wonderful and extraordinarily good if the HMO model could be made to work for the Medicare population. Certainly the fee-for-service model in which the federal government pays what is “typical and customary” for non-Medicare patients or in which the federal government tries to effectively run and manage its own Taylorized classification of all possible medical procedures does not seem to provide the right balance between keeping costs where they should be and keeping patient access and treatment where they should be also. ‘ Plus the fee-for-service model shows no signs of ever being able to provide the proper incentives to manage chronic conditions that are an increasing part of our healthcare costs.
What I do not understand is why it was so clear that Medicare advantage was not working a decade ago and yet is working now. What has changed? And why has it changed? And how can we keep it from changing back?
It is at moments like now that I wish I were a real healthcare economist rather than simply somebody who plays one on the Internet…