As Medicare Advantage plans approach their 25th birthday — the law that created the current system allowing private health care providers to offer a one-stop-shop alternative to original Medicare was signed by President Bill Clinton in 1997 — they have become an integral part of the program. Today, an estimated 42 percent of Medicare recipients are enrolled in an MA plan, and experts project the majority of beneficiaries may get their medical coverage through one by 2030.
The growth of MA plans is linked closely to the founding idea of Medicare: Provide older Americans with the same kind of health insurance coverage they got when they were working. For the first 20 years of the program, original Medicare did just that by offering plain-style health insurance in which doctors and hospitals simply got paid for services rendered. But as health maintenance organizations (HMOs) and preferred provider organizations (PPOs) came on the scene in a big way during the 1980s and ’90s, more Americans became accustomed to getting care through a single, all-encompassing health care network. That led to the creation in 1997 of Medicare Part C — first called Medicare+Choice and now Medicare Advantage.
Ever since, most Medicare enrollees have had a decision to make: Choose pay-per-service health insurance under original Medicare or become a member of an MA plan that gets paid a lump sum by the federal government to provide all your care. In 2005, 13 percent of enrollees chose the MA option, and the growth has been steady ever since; enrollment in Advantage plans rose 10 percent between 2020 and 2021 alone.
One reason for this growth is all the extra benefits MA plans provide — but which Congress has not yet allowed original Medicare to offer. For example, many MA plans tout gym benefits plus some dental, vision and hearing care. And in recent years, government officials have given the plans permission to offer transportation to doctor appointments, modifications to beneficiaries’ homes such as wheelchair ramps, and even carpet cleaning to help people with respiratory problems.
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AARP is lobbying Congress to allow original Medicare to offer similar benefits to its enrollees, as is the Center for Medicare Advocacy, which stated in a March report that “there is a growing imbalance between Medicare Advantage and traditional Medicare ... relating to the scope of coverage.”
Another selling point of MA plans is their one-stop-shopping experience, says Tricia Neuman, senior vice president of the Henry J. Kaiser Family Foundation (KFF). In contrast, original Medicare enrollees wanting prescription drug coverage must shop for a private Part D plan, and many also choose to buy a supplemental or “Medigap” insurance policy to cover health costs not covered by Medicare. They also need to consider buying separate dental and vision care policies, she says.
Neuman also points to the aggressive marketing of MA plans. From NFL Hall of Famer Joe Namath to former sitcom star Jimmie “J.J.” Walker, celebrities are routinely endorsing MA plans in TV ads touting all their extra services at no increase to your usual Part B premium.
“Traditional Medicare doesn’t really market,” Neuman says.
Although Medicare Advantage is obviously popular with consumers, a full report card on it has to look at its macro-level goals, such as providing superior health care to older Americans while saving taxpayers money. And at that level, the jury is still out. Here is a look at MA plans today from several important angles.
The MA consumer experience
Being in an MA plan is very different from getting your care under original Medicare.
If you are enrolled in original Medicare and you need a doctor, you can go to any provider in the United States who has signed up to treat Medicare patients. If you need to see a specialist or go to a hospital, you can pick whomever or whichever you want, as long as they participate in the program. You control general oversight of your health care, though you have the option of using a primary care physician to help guide your choices.
MA plans mostly come in one of two approaches. HMOs typically have closed panels of doctors who often practice together in one location; usually your care will be entirely coordinated by that medical group. If you go outside the HMO’s staff for health care, the plan likely won’t pay for it. If you want to see a specialist — say, a cardiologist to thoroughly check out your heart health — you typically need your primary care doctor to give a referral to a specialist within the HMO.
PPOs are a little looser than HMOs, but they still have restrictions. You’ll likely have a list of professionals within the PPO that you must choose from, but you won’t need a gatekeeping doctor to preapprove seeing a specialist. Still, you may have to get more pre-authorizations for procedures or tests than under original Medicare. Some PPOs do let their members get outside care, but you’ll usually pay much more for it.