As Medicare Advantage Evolves, What About Traditional Medicare?

Consumers with Medicare Advantage—Medicare’s private plan alternative to traditional Medicare—may notice some changes during this fall’s Medicare Open Enrollment Period. For example, starting in 2020, Medicare Advantage plans may offer more telehealth benefits, such as being able to videoconference with a physician located miles away.

This is just one of several ways that insurance coverage under Medicare Advantage is changing. But so far traditional Medicare, which provides critical health care insurance for the vast majority of people with Medicare, hasn’t seen comparable changes. This disparity could be cause for some concern.

Medicare Advantage: What’s New?

Aside from the expansion of telehealth services , policymakers also recently expanded Medicare Advantage’s demonstration on value-based insurance design (VBID). This is an initiative that tests whether insurers’ use of financial incentives—such as offering lower copays for benefits that help people manage their health conditions and avert more costly treatments down the road—can ultimately improve consumers’ health while reducing overall health care costs.

There are also much talked-about changes to the rules governing Medicare private plans’ so-called “supplemental benefits”—that is, those benefits not normally covered by traditional Medicare (e.g., vision and dental care). These changes could potentially mean that some Medicare Advantage enrollees will be able to access a host of new and important benefits such as in-home support, assistance for family caregivers, or services to address social determinants of health. But since plans have the flexibility to limit coverage to certain enrollees, these new supplemental benefits could potentially be available only to some people with Medicare Advantage.

A Widening Gap: Favoring Medicare Advantage over Traditional Medicare

Meanwhile, policymakers have not yet implemented similar changes to traditional Medicare, which covers two-thirds of all Medicare beneficiaries.

Making improvements only to Medicare Advantage widens the difference between the two Medicare options and has led some experts to conclude that it effectively amounts to favoring Medicare’s private plans over the traditional program. These actions could also drive more individuals to enroll in Medicare Advantage, which has already quickly grown to cover over one-third of all Medicare beneficiaries.

For many consumers, Medicare Advantage may well be the best choice, just as for others, traditional Medicare is the right option. Yet, the imbalance between Medicare Advantage and traditional Medicare is certainly something to pay attention to, given recent reports that many Medicare Advantage plans may be prone to billing abuses, earn high profits without clear evidence of providing better care, may not serve sicker enrollees well, and are being favored by federal policies.

Without a doubt, the new changes to Medicare Advantage are helpful; but, they do lead to worries that consumers could focus too much on potentially limited new benefits and pay less attention to important coverage features such as whether you can keep your doctor, whether you need a referral before seeing a specialist, or how much you will pay out of pocket. We know that choosing between different Medicare options is already very confusing for consumers, especially when it comes to figuring out which coverage differences are meaningful or consequential.

Finding Opportunities to Lift Both Traditional Medicare and Medicare Advantage

Improvements to Medicare should occur for all beneficiaries, regardless of whether they choose traditional Medicare or Medicare Advantage. To reach this goal, policymakers should test and implement innovations not only in Medicare Advantage but also in traditional Medicare.

The bottom line: As the Medicare program modernizes, those in traditional Medicare should not be left behind.
Claire Noel-Miller is a senior strategic policy adviser at the AARP Public Policy Institute. Her expertise includes quantitative research methods applied to a variety of health policy issues related to older adults.
Jane Sung is a senior strategic policy adviser at the AARP Public Policy Institute. Her areas of expertise include health insurance coverage among adults age 50 and older, private health insurance market reforms, Medicare Advantage, Medigap, and employer and retiree health.