Improving Affordability and Equity in Medicare Advantage.

Area of Science:

• Health Policy
• Economics
• Public Health

Background:

• Projected federal deficits necessitate spending reductions, with Medicare as a potential target.
• Medicare Advantage enrollment exceeds one-third of the Medicare population, costing over $230 billion annually.
• Weak competition and inequitable subsidy distribution characterize the current Medicare Advantage program.

Purpose of the Study:

• To propose a Medicare Advantage payment system reform.
• To identify policy options for lowering federal costs and enhancing program equity.
• To estimate the impact of proposed reforms on federal spending and enrollee benefits.

Main Methods:

• Development of a simplified framework for policy options.
• Utilization of 2015 Centers for Medicare and Medicaid Services data.
• Estimation of stylized impacts on federal spending and enrollee benefits.

Main Results:

• The proposed reforms offer a potential approach to reduce federal spending.
• The reforms could lead to a more equitable distribution of subsidies among beneficiaries.
• Analysis provides estimates of the stylized impact on federal costs and enrollee benefits.

Conclusions:

• Reforming the Medicare Advantage payment system is a viable strategy for fiscal responsibility.
• Policy adjustments can address issues of weak competition and uneven subsidy distribution.
• The study provides a data-driven approach to evaluating Medicare Advantage reform options.