It’s Your Advantage

Over 8 million Medicare beneficiaries count on the Medicare Advantage program to meet their health care needs. Yet today, this program is in jeopardy, and with it, health care for millions of Medicare beneficiaries in need of affordable medicine.

Congress should oppose reductions in Medicare Advantage funding that would result in higher premiums, reduced benefits and fewer private plan choices. Congress should protect MA options for beneficiaries because:

• Low-income and minority beneficiaries depend on MA and would be hardest hit by funding cuts.
  
  
• Funding cuts would jeopardize comprehensive benefits and lower cost sharing under MA.
  
  
• Congress already reduced MA funding by $13 billion beginning in 2007.
  
  
  

Low-income and Minority Beneficiaries Depend on MA and Would Be Hardest Hit by Funding Cuts

• Low-income beneficiaries rely on MA as a safety-net from high out-of-pocket Medicare costs. A 2005 study by Ken Thorpe, Ph.D., of Emory University confirms that an average of 37 percent of beneficiaries with annual incomes under $30,000, without Medicaid or employer coverage, rely on MA for comprehensive benefits and protection from high out-of-pocket cost sharing in traditional Medicare.
  
  
• MA serves a high proportion of minorities. Forty percent of African-Americans and 53 percent of Hispanic beneficiaries without Medicaid or employer coverage rely on MA. Funding cuts would disproportionately harm minority beneficiaries, forcing many to experience the high out-of-pocket expenses in traditional Medicare.
  
  

Funding Cuts would Jeopardize the Better Benefits and Lower Cost Sharing Experienced in MA

• MA enrollees have better benefits and lower out-of-pocket cost sharing. In 2006, the Centers for Medicare and Medicaid Services (CMS) found that MA enrollees saved about $86 a month, on average, when compared to beneficiaries in traditional Medicare. MA enrollees also saved, on average, $1,200 a year on their prescription drug costs. In addition, 98 percent of all benefieiaries have access to MA plans with annual out-out-pocket cost limits; critical protection not available in traditional Medicare.
  
  
• Beneficiaries have expanded MA choices. According to CMS, all Medicare beneficiaries will have access to MA plans in 2007. Further funding cuts could jeopardize beneficiary access to these critical choices.

Congress Already Cut MA Funding by $13 Billion Beginning in 2007

• MA funding was already slashed. Congress cut MA funding by $6.5 billion, between 2007 and 2011, in the 2005 Deficit Reduction Act (DRA) and cut an additional $6.5 billion from the regional stabilization fund in the 2006 Tax and Health legislation.
  
  
• 2007 MA payment increases - an average of only 1 percent - are dramatically below the expected increase in the cost of healthcare. Because medical costs are expected to rise 6-8 percent in 2007, the inadequate increase in MA payments is likely to force future increases in monthly premiums and/or reductions in benefits.
  
  

Congress Should Oppose Funding Cuts to the Medicare Advantage Program. Proposals to further slash MA base payments (e.g., cutting out medical education costs) will send a message that the federal government is not a reliable business partner in the Medicare program. Funding cuts would force MA plans to increase beneficiary premiums, reduce benefits, decrease provider payments or leave the Medicare program entirely, resulting in fewer private plan choices and greater beneficiary disruptions, especially in rural and underserved areas.