In 2019 the federal government spent $321 more per person enrolled in an Advantage plan than those enrolled in a Medicare supplement plan. That works out to an additional $7 billion burden on taxpayers.
The $7 billion has to come from somewhere, and every taxpayer in America pays this additional cost through payroll taxes. Medicare Part B is funded through federal taxes as well as premiums paid by those enrolled.
Medicare Advantage plan providers receive what is known as risk adjustments from the federal government when they enroll higher cost individuals in their Advantage plans. These risk adjustments are meant to help offset the costs involved in providing care to these individuals. Some insurers are being sued by the government for allegedly inflating bills through coding practices. Charging for diagnoses never treated and inflating the number of services provided are alleged. The government contends that this is why Advantage plans have much higher gross margins for insurers than Medicare supplement plans.
The Biden administration has announced that they are reducing reimbursement rates for Advantage plans. This typically means higher deductibles, co-pays, co-insurance, and maximum out of pocket expenses for the Medicare Advantage policy holder. It likely also means less access to care. When doctors are paid less for services, they tend to leave Advantage plans, only seeing patients with Medicare supplement plans instead.
It is also helpful to keep in mind that Advantage plans have seen a 166% increase in complaints the last few years, many policyholders not realizing just how restrictive care can be with these policies, not to mention the thousands of dollars in out-of-pocket expenses associated with Advantage plans. Once the Biden administration’s reduced payment program kicks in complaints will only increase.
The bottom line is this…. buy a Senior Security Plan G Medicare supplement plan and a decent Part D drug plan and stay away from Advantage plans. It will be much cheaper in the end, and you will have much more access to care.