NCPA - National Center for Policy Analysis

Medicare Managed Care Still a Good Buy for Americans

August 14, 2003

A recent report by the Commonwealth Fund analyzed the out-of-pocket spending among Medicare+Choice (M+C) enrollees. However, to gauge the importance of these findings and whether seniors are advantaged or disadvantaged by enrolling in an M+C plan, it is necessary to make relevant comparisons to the out-of-pocket cost increases in other options available to Medicare beneficiaries.

According to the Commonwealth Fund report and analysts for the American Association of Health Plans (AAHP):

  • The out-of-pocket costs for an average M+C enrollee have increased approximately 10 percent from $1,786 in 2002 to $1,964 in 2003.
  • Furthermore, M+C out-of-pocket spending has approximately doubled in the past 4 years from $976 in 1999.
  • However, average out-of-pocket costs are still $667 lower for M+C enrollees than for beneficiaries with traditional fee-for-service (FFS) Medicare coverage.
  • In addition, enrollees in M+C plans paid less than one-quarter as much of the cost sharing for physician and hospital services as FFS Medicare beneficiaries.

Indeed, M+C plans had lower out-of-pocket cost to seniors than Medicare Preferred Provider Organization demonstrations plans and private FFS plans.

While the report highlights the increases in out-of-pocket costs for M+C enrollees, it also contains critical comparative information for FFS Medicare enrollees. Comparing the two programs, M+C enrollees actually pay less in out-of-pocket costs than those in fee-for-service Medicare.

Source: Marsha Gold and Lori Achman (Mathematica Policy Research, Inc.), "Average Out-of-Pocket Health Care Costs for Medicare+Choice Enrollees Increase 10 percent in 2003," Issue Brief, August 2003, Commonwealth Fund; and analysis from American Association of Health Plans, August 2003.


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