Comparing Traditional Medicare to Medicare Advantage

Transcription

1 Comparing Traditional Medicare to Medicare Advantage Amil Petrin University of Minnesota-Twin Cities and Heller Hurwicz Economics Institute November 17, 2016 Amil Petrin (University of Minnesota-Twin Comparing Cities and Traditional Heller Hurwicz Medicare Economics to Medicare Institute) Advantage November 17, / 14

2 Medicare Medicare provides health insurance for those aged 65 or older and also for some younger people with disabilities In 2015, Medicare provided coverage for 46 million people age 65 and older and nine million younger people. Provides Fee-For-Service (FFS) payments for a wide range of medical needs, including in-patient hospital, hospice and skilled nursing services, payments to physicians and surgeons in hospitals and skilled nursing facilities, and necessary outpatient hospital services On average Medicare covers about half of the health care charges and enrollees must make up the difference either through out-of-pocket expenditures or more commonly with some kind of supplemental insurance Amil Petrin (University of Minnesota-Twin Comparing Cities and Traditional Heller Hurwicz Medicare Economics to Medicare Institute) Advantage November 17, / 14

3 Medicare Advantage (1) Since the inception of Medicare Advantage in the early 1980s Medicare beneficiaries can opt out of Medicare and enroll in a private insurance plan that is required to cover at the minimum all Medicare services The program was established to create more choices for Medicare beneficiaries and - perhaps more importantly - to try to capture potential cost savings from privately managed care. Amil Petrin (University of Minnesota-Twin Comparing Cities and Traditional Heller Hurwicz Medicare Economics to Medicare Institute) Advantage November 17, / 14

4 Medicare Advantage (2) The private plans receive an annual payment from the federal government for each enrollee they have. The payment is determined by the Center for Medicare and Medicaid Services (CMS) and is determined annually on a county-by-county basis by assessing the average health of seniors in each county. Initially these payments were much lower than they are now. In 2003 they were significantly increased and entry has followed. In 2009 most ranged from $700 to $1000 per month. Medicare pays private plans 14% more per senior citizen relative to traditional Medicare (MedPAC 2010). Amil Petrin (University of Minnesota-Twin Comparing Cities and Traditional Heller Hurwicz Medicare Economics to Medicare Institute) Advantage November 17, / 14

5 Enrollment over time Amil Petrin (University of Minnesota-Twin Comparing Cities and Traditional Heller Hurwicz Medicare Economics to Medicare Institute) Advantage November 17, / 14

6 Three Important Differences Perhaps the three most important differences between a MA plan and Medicare Medicare Advantage plans often cover more than Medicare like an annual physical exam, vision and/or dental coverage, and sometimes hearing and wellness benefits not found in Original Medicare are included in a Medicare Advantage plan. All MA plans include a limit on how much a beneficiary will have to spend annually out of pocket; in Medicare that amount is unlimited. Medicare Advantage plans are primarily managed health care plan (typically a health maintenance organization (HMO) or a preferred provider organization (PPO) ) Amil Petrin (University of Minnesota-Twin Comparing Cities and Traditional Heller Hurwicz Medicare Economics to Medicare Institute) Advantage November 17, / 14

7 Medicare Advantage in 2016 Amil Petrin (University of Minnesota-Twin Comparing Cities and Traditional Heller Hurwicz Medicare Economics to Medicare Institute) Advantage November 17, / 14

8 Medicare Advantage in 2016 Amil Petrin (University of Minnesota-Twin Comparing Cities and Traditional Heller Hurwicz Medicare Economics to Medicare Institute) Advantage November 17, / 14

9 Medicare Advantage in 2016 Amil Petrin (University of Minnesota-Twin Comparing Cities and Traditional Heller Hurwicz Medicare Economics to Medicare Institute) Advantage November 17, / 14

10 Comparing Beneficiaries : Medicare vs. Medicare Advantage Curto, Einav, Levin, Bhattacharya (2014 NBER WP) Table 1: Summary statistics Variable Mean Std. Dev. 10th Pctile 90th Pctile Mean Std. Dev. 10th Pctile 90th Pctile No. of Obs. (beneficiary-years) Unique beneficiaries Traditional Medicare (TM) Age a Male Urban b New Medicare enrollee Supplemental insurance c Part D coverage Medicare Advantage (MA) 125,669,915 28,188,896 30,403,528 7,842,799 Inpatient days Died during year Risk score Log(Risk score change) d FFS monthly claims costs e , ,705.2 MA monthly total CMS payment f , ,422.6 MA monthly rebate payment f Statistics are based on full sample of beneficiaries from The Traditional Medicare (TM) sample excludes beneficiaries dually eligible for Medicare and Medicaid as well as Disabled beneficiaries. The Medicare Advantage sample excludes Disabled beneficiaries as well as those enrolled in employer-sponsored plans or special needs plans. See the text for exact sample restrictions. Statistics are weighted by total months of enrollment during the observation year. a Age as of December 31 of observation year. b Urban means county with population greater than 250,000 in 2004 (when the urban floor was last set before the beginning of the sample period). c Supplemental insurance refers to Medigap or retiree supplemental insurance (RSI). d The natural logarithm of the risk score change log(risk score in following year) minus log(risk score in observation year) -- is defined over the sample of beneficiaries who survive until the following year. e FFS monthly claims costs are computed by adding up total FFS claims for all TM enrollees, adding up total months of enrollment for all TM enrollees, and dividing the former by the latter. Data is for f Mean MA monthly plan payment and rebate payment are defined analogously to FFS cost. Data is for The averages are almost the same (746.0 and 75.6 for total and rebate payments, respectively). Amil Petrin (University of Minnesota-Twin Comparing Cities and Traditional Heller Hurwicz Medicare Economics to Medicare Institute) Advantage November 17, / 14

11 Market Structure KaiserFamilyFoundation MA 2016 Spotlight Table A6. Market Share of the Top Three Medicare Advantage Firms, by State, 2016 Total Firm 1 Firm 2 Firm 3 Other Firms State Share Enrollment for 3 Firms Name Share Name Share Name Share Share Alabama 257,218 67% BCBS 24% CIGNA 23% Humana Inc. 20% 33% Alaska % UnitedHealth Group, Inc. 61% Aetna Inc. 39% 0% Arizona 442,282 67% UnitedHealth Group, Inc. 40% BCBS 14% Humana Inc. 12% 33% Arkansas 121,543 78% Humana Inc. 35% UnitedHealth Group, Inc. 29% BCBS 14% 22% California 2,244,709 72% Kaiser Foundation Health Plan, Inc. 47% UnitedHealth Group, Inc. 18% SCAN Health Plan 7% 28% Colorado 293,275 88% UnitedHealth Group, Inc. 41% Kaiser Foundation Health Plan, Inc. 34% Humana Inc. 13% 12% Connecticut 165,722 87% EmblemHealth, Inc. 34% UnitedHealth Group, Inc. 32% Aetna Inc. 21% 13% Delaware 16,792 89% Aetna Inc. 44% CIGNA 34% UnitedHealth Group, Inc. 11% 11% District of Columbia 12,292 89% Kaiser Foundation Health Plan, Inc. 49% UnitedHealth Group, Inc. 32% CIGNA 8% 11% Florida 1,670,266 68% Humana Inc. 36% UnitedHealth Group, Inc. 24% BCBS 8% 32% Georgia 508,161 78% UnitedHealth Group, Inc. 46% Humana Inc. 22% Aetna Inc. 10% 22% Hawaii 113,451 80% BCBS 32% Kaiser Foundation Health Plan, Inc. 28% UnitedHealth Group, Inc. 20% 20% Idaho 90,435 75% BCBS 37% PacificSource Health Plans 23% UnitedHealth Group, Inc. 16% 25% Illinois 405,756 75% UnitedHealth Group, Inc. 38% Humana Inc. 25% Aetna Inc. 11% 25% Indiana 279,338 90% Humana Inc. 37% UnitedHealth Group, Inc. 30% BCBS 23% 10% Iowa 98,790 89% Aetna Inc. 36% UnitedHealth Group, Inc. 33% Humana Inc. 20% 11% Kansas 67,733 94% Aetna Inc. 43% Humana Inc. 42% UnitedHealth Group, Inc. 8% 6% Kentucky 229,916 93% Humana Inc. 60% BCBS 18% UnitedHealth Group, Inc. 15% 7% Louisiana 249,920 93% Humana Inc. 65% PH Holdings, LLC 22% Vantage Holdings, Inc. 6% 7% Maine 75,116 85% Martin's Point Health Care, Inc. 48% Aetna Inc. 22% UnitedHealth Group, Inc. 14% 15% Maryland 88,998 72% Kaiser Foundation Health Plan, Inc. 44% CIGNA 16% UnitedHealth Group, Inc. 12% 28% Massachusetts 246,018 79% Tufts Associated HMO, Inc. 43% UnitedHealth Group, Inc. 18% BCBS 18% 21% Michigan 621,118 85% BCBS 57% Spectrum Health System 18% Henry Ford Health System 11% 15% Minnesota 510,713 82% BCBS 39% Medica Holding Company 25% UCare Minnesota 18% 18% Mississippi 85,208 98% Humana Inc. 63% WellCare Health Plans, Inc. 21% CIGNA 13% 2% Missouri 337,119 80% UnitedHealth Group, Inc. 32% Aetna Inc. 29% Humana Inc. 20% 20% Montana 39,200 98% BCBS 47% New West Health Services 36% Humana Inc. 14% 2% Nebraska 37,169 94% UnitedHealth Group, Inc. 47% Aetna Inc. 33% Humana Inc. 14% 6% November 17, / Nevada 157,379 88% UnitedHealth Group, Inc. 45% Humana Inc. 33% Renown Health 11% 12% Amil Petrin (University of Minnesota-Twin Comparing Cities and Traditional Heller Hurwicz Medicare Economics to Medicare Institute) Advantage 14 New Hampshire 20,756 81% UnitedHealth Group, Inc. 53% Humana Inc. 15% BCBS 12% 19%

12 Three Players may not be the best But it may be sufficient Bresnahan and Reiss (1990,1991) for Dentists, Tire Dealers, Hairstylists, and many other businesses Hall and Woodward (2012) for Mortgage Brokers Amil Petrin (University of Minnesota-Twin Comparing Cities and Traditional Heller Hurwicz Medicare Economics to Medicare Institute) Advantage November 17, / 14

13 Some facts Many studies find small increases in consumer benefits of between 10 and 50 cents on every additional dollar the government spends Chernew, Miller, Petrin, and Town (2016) find implied switching costs on average of $750 to move from Medicare to MA Amil Petrin (University of Minnesota-Twin Comparing Cities and Traditional Heller Hurwicz Medicare Economics to Medicare Institute) Advantage November 17, / 14

14 Looking Forward Affordable Care Act cuts back payments to private plans to Medicare levels. Will MA plans exit? Will Medicare survive? Donald Trump Amil Petrin (University of Minnesota-Twin Comparing Cities and Traditional Heller Hurwicz Medicare Economics to Medicare Institute) Advantage November 17, / 14