America's Benefit Specialist November 2022

MEDICARE MATTERS

AHIP STUDY: MEDICARE

ADVANTAGE COSTS LESS THAN ORIGINAL MEDICARE Every American deserves access to afford able, high-quality health coverage—in cluding the more than 29 million seniors and people with disabilities who choose Medicare Advantage. A new study offers more compelling data and evidence that MA delivers better value for patients, consum ers and taxpayers. The study, conducted by Wakely Consulting Group on behalf of AHIP, analyzed data on original Medicare costs used to compare MA and original Medicare spending. It finds that accounting for comparable MA coverage and enrollee populations, average original Medicare costs were 9.4% higher than government estimates in 2019. It is clear from Wakely’s study that, rather than being more expensive than original Medicare, MA is actually significantly less expensive, even accounting for all the extra benefits and services the program provides. For example, in 2019, rather than being two percent more expensive than original Medicare, on an apples-to-apples basis, av erage MA spending was actually about seven percent lower than original Medicare. “Medicare Advantage is a prime example of government and the free market working together to provide millions of Americans with the care and coverage they need and deserve,” said Matt Eyles, AHIP presi dent and CEO. “From grocery deliveries to vision, dental and hearing benefits, to

zero-premium prescription drug coverage, Medicare Advantage helps keep seniors and people with disabilities healthy—and at a price they can afford. And as more Ameri cans choose MA, health insurance providers remain committed to delivering better value for lower costs than original Medicare.” For the study, Wakely Consulting Group examined data from 2019, and analyzed how original Medicare costs would change if it capped maximum out-of-pocket (MOOP) costs just as MA plans do, and how costs change when looking only at original Medi care enrollees with both Part A and Part B— both of which are required to enroll in MA. These savings are one more demonstra tion of how MA delivers better services, better access to care and better value: • Nearly half of all racial/ethnic minorities eligible for Medicare choose MA. 1 • MA covers more racially diverse pop ulations (32%) than original Medicare (21%). 2 • Forty percent of MA enrollees make less than $25,000 per year. 3 Many of these in dividuals might not be able to afford the out-of-pocket costs of original Medicare. • About 9 million MA enrollees have in come below 200% of the federal poverty level. 4

• Fifty-seven percent of MA enrollees are women. 5 • Seniors covered by MA are more satisfied than seniors with original fee-for-ser vice Medicare. Ninety-three percent are satisfied with their MA, while only 84% of those with original Medicare report being satisfied. 6 • MA outperforms original Medicare on 16 out of 16 different clinical quality measures. 7 To view the study, visit www.ahip.org/re sources/value-of-medicare-advantage-com pared-with-original-medicare. 1 https://ahiporg-production.s3.amazonaws. com/documents/202112_AHIP-MARe search.pdf 2 https://aspe.hhs.gov/reports/prescrip tion-drug-pricing-aspe-resources-relat ed-safe-harbor-rule 3 www.cms.gov/Research-Statistics-Da ta-and-Systems/Statistics-Trends-and-Re ports/MCRAdvPartDEnrolData/ Monthly-Contract-and-Enrollment-Sum mary-Report 4 www.ahip.org/why-seniors-choose-medi care-advantage/ 5 www.ahip.org/news/press-releases/ norc-report-dual-eligibles-in-medicare-ad vantage-faced-fewer-covid-related-disrup tions-in-care 6 www.ahip.org/resources/providing-bet ter-services-better-care-and-better-value 7 www.ncbi.nlm.nih.gov/pmc/articles/ PMC5682140/

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