Medicare Advantage and Medicare: Not Too Much Rocking of the Boat by Either Candidate or Party

Fourth in five parts of our coverage of the 2024 election and healthcare

A Republican presidential victory might ease some of the pressures on Medicare Advantage (MA) plans while having a Democrat in the White House might continue to put pressure on the plans’ revenue if the Biden administration policies to trim MA payments were to continue in Harris one. But neither side is likely to make major changes to the popular option of Medicare Advantage, whic involves having private insurers manage Medicare benefits. And both parties and candidates say they are committed to protecting Medicare overall, despite actuarial conerns.

“A dramatic restructuring is not on the agenda,” says Jack Hoadley, Ph.D., research professor emeritus of the Health Policy Institute at Georgetown University in Washington, D.C.

Enrollment in MA plans has soared over the past two decades. In the past year, 30.8 million people, or 51% of those eligible for Medicare, enrolled in the plans. in 2013, just 29% of people chose Medicare Advantage plans, according to a tally kept by KFF. Enrollment is expected to continue to climb so that by 2033, 62% of Medicare beneficiaries will be enrolled in MA plans.

Jack Hoadley, Ph.D.

“I think there is bipartisan support for the idea that Medicare Advantage provides benefits to the overall system and in particular to beneficiaries who are more cost conscious,” says Sean Creighton, managing director at Avalere.

MA plans, which are offered by private insurers, may appeal to patients because of their lower costs, with some having premiums that cost nothing. Many plans also include added benefits, such as dental and vision coverage, gym memberships, or transportation to medical appointments. The trade-offs for beneficiaries may include a narrower network of providers (those with whom the plan has negotiated contracts) and higher out-of-pocket costs relative to coverage in traditia a Medigap plan.

“A Democratic administration is likely to continue some current policies that have decreased Medicare Advantage revenue, even in the face of increased costs,” Creighton says.

Historically, Republicans have been “more enthusiastic” about expanding the role of private plans in Medicare, says Tricia Neuman, senior vicenpresident at KFF.

Sean Carrington

Traditional Medicare is the default enrollment choice for those 65 years or older. Project 2025, a conservative blueprint for the next Republic administration developed by The Heritage Foundation, calls for MA to become the default option. Former President Donald Trump distanced himself from Project 2025, even though many former officials from his administration have been involved in the project.

Having MA as the default option raises questions about how to assign beneficiaries to a specific plan and whether MA plans would have the capacity for an influx of new enrollees, Hoadley says.

Some argue that MA plans can sweeten Medicare with extra benefits and charge no or very low premiums because they are overpaid by the government. “There are bipartisan concerns [about] the level of payments to Medicare Advantage plans and some of the policies that the plans have in place around utilization management and prior authorization,” Creighton says.

Proportion of Medicare beneficiaries enrolled in Medicare Advantage plans.

Source: KFF

The Wall Street Journal has published investigative news stories this summer about MA plans using questionable diagnoses to increase payment rates from the federal government.

Meanwhile,MA plans are feeling financial pressure as costs rise due to increased healthcare use and inflation. The pressure increased when the CMS announced an average 3.7% reimbursement rate increase for 2025, which some experts say amounted to a 0.16% cut because of the use and price increase.

Trump and Harris are likely to position themselves as ardent defenders of Medicare, a popular program that benefits an age group who votes in large numbers, and their opponent as undercutting the program.

In some of her early campaign speeches, Harris has talked about expanding Medicare (not just MA plans) to cover dental, vision and hearing benefits, a position previously staked out by Sen. Bernie Sanders and many in the progressive wing of the Democratic party. Trump has promised not to cut Medicare, and the platform adopted by the Trump-controlled Republican party says the GOP will protect the program from a “Democrat plan to add tens of millions of new illegal immigrants to the rolls of Medicare.” The platform was adopted before Harris was the Democratic nominee. When she ran for president in 2019, Harris proposed a Medicare for All program and indicated in some debates and media interviews that she favored coverage for immigrants who were living in the country illegally.

As a result of the Inflation Reduction Act of 2022, the CMS is now negotiating drug prices for Medicare, with the prices of the first 10 drugs set to go into effect in 2026. A $2,000 cap on out-of-pocket costs for seniors enrolled in Part D plans goes into effect next year, and Harris references the cap often in her speeches as one of the steps that the Democrats have taken to rein in inflation.

Harris “is likely to press full steam ahead with the prescription drug provisions in the Inflation Reduction Act and defend the law against lawsuits filed by drug companies that aim to prevent the federal government from negotiating Medicare drug prices,” Neuman says.