Medicare Advantage: Better Information Tools, Better Beneficiary Choices, Better Competition

Since the 1970s, and codified in the Tax Equity and Fiscal Responsibility Act of 1982, Medicare beneficiaries have had the choice of receiving their Medicare benefits through private health plans instead of the traditional fee-for-service (FFS) Medicare program administered by the federal government. The policy thrust of private plan participation in Medicare is that competition can foster both better quality and lower costs. Today, 1 in 3 of the 57 million Medicare beneficiaries are enrolled in private health plans, known as Medicare Advantage (MA) plans.[1][2] Although growth in Medicare per capita spending has slowed in recent years, there is still a compelling need to improve quality and control costs as roughly 10,000 baby boomers a day age into Medicare coverage.

As beneficiaries continue to choose MA plans, the potential payoff of increased plan competition on both quality and price grows as well. In “Medicare Advantage: Better Information Tools, Better Beneficiary Choices, Better Competition” (PDF), John Bertko, Paul B. Ginsburg, Steven Lieberman, Erin Trish, and Joseph Antos make four recommendations to help empower beneficiaries to make choices that will not only benefit them but the larger health care system as well.

1. Develop tools that can help beneficiaries understand how the various components of health insurance, such as deductibles, coinsurance, and copayments, interact and how they can balance tradeoffs between higher and lower premiums vs. higher and lower cost sharing at the point of service vs. narrower and broader choice of providers.
2. Invest in and improve consumer-support tools, like the online Plan Finder, for both MA plans and Part D prescription drug plans. Although the Plan Finder can be helpful, many seniors find the tool difficult to use or lacking in detailed information. Enhancing the ability of natural language processing software tools to better understand questions—for example, Siri for Apple users or Alexa for Amazon—and providing more real-world examples of common situations and tradeoffs seniors face when choosing and enrolling in a plan would be valuable. Other enhancements include adding functionality to the Plan Finder tool so that seniors can list their chronic conditions or choose from a drop-down box that would improve the accuracy of estimated costs and differences among plan options, and also list where they live.
3. Assess whether counseling programs are effective in improving consumer decisions. Currently, a relatively small number of beneficiaries use SHIP, and it is unclear why. Assessing whether greater access to one-on-one counseling for beneficiaries is needed is an important first step in helping them make better use of existing information resources and tools.
4. Standardize the types and number of MA product offerings, constraining them to three levels—standard, standard-plus, and enhanced—to facilitate beneficiary comparison-shopping on price and quality. That is, in each region, each Medicare Advantage Organization (MAO) could offer three products: a standard benefits option (which every MAO participating in a region would have to offer and would have the same plan design), a standard-plus benefits option, and an enhanced benefits option.

Medicare Advantage: Better Information Tools, Better Beneficiary Choices, Better Competition (PDF)