The Affordable Care Act (ACA) reduced federal payments to Medicare Advantage plans to bring them more in line with payments under traditional Medicare. Despite predictions that enrollment would drop, enrollment in Medicare Advantage plans has actually climbed from 11.1 million in 2010 to 14.4 million in 2013 – a 30% increase, according to a report by the Kaiser Family Foundation.
Enrollment continues to grow across counties and high and low payment quartiles, which suggests that the market offers enough choice to attract enrollees even if some plans become less competitive under the ACA. However, the analysis did not examine cost sharing or benefits, and it is unclear how much the plans have changed cost sharing or extra benefits since 2012.
The Congressional Budget Office expects enrollment to continue to increase in 2015 and future years. But, the CMS Office of the Actuary expects enrollment to decrease after 2014.
Since payment reductions have not yet been fully phased in, it remains to be seen how companies will respond. Also, quality-based bonus payments have partly offset the payment reductions. There could be some shakeout in the market, over the next few years, as payment reductions are implemented and benchmarks move closer to for traditional Medicare spending. To remain viable, some plans will have to become more efficient or modify the extra benefits they provide. HMOs seem to have an advantage over other model types. For more information, visit www.kff.org.
