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Navigating the Medicare market

By Jennie L. Phipps · Bankrate.com
Tuesday, August 19, 2014
Posted: 5 pm ET

Which is better -- traditional Medicare with a supplemental plan and a Part D prescription drug plan, or a Medicare Advantage plan, which wraps everything into one managed care package?

Ten years ago, traditional Medicare with a supplemental plan would have won hands down, according to a recently released comprehensive study published in The Milbank Quarterly by researchers affiliated with Harvard University. Today, the answer is less black and white, researchers concluded. And while the two primary authors, Thomas McGuire and Joseph Newhouse, didn't come down firmly on either side, they obviously leaned toward Medicare Advantage plans.

© Monkey Business Images/Shutterstock.com

Overall, the study concluded that on average, Medicare Advantage plans, which attract 28 percent of participants and tend to cost participants less than traditional Medicare, "offer care of equal or higher quality" than traditional Medicare does. In parts of the country where Medicare Advantage options are numerous, the competition actually serves to improve the care offered through traditional Medicare, the study says.

If you're a Medicare participant or about to be one, here are some of the considerations this study examined:

  • When Medicare Advantage plans were first introduced, they tended to attract the poorest and sickest patients who were willing to trade away broad access to health-care providers in return for lower cost. Healthier and wealthier people, especially those with access to retiree health care, chose traditional Medicare because it offers more freedom of choice. Over time, thanks to changes in structure and government policy, this imbalance has narrowed, the study says.
  • Complex choices appeared to befuddle many participants. When there are literally hundreds of choices -- like there are in some parts of the country -- participants tend to favor lower upfront cost savings at the expense of better benefits. For some people, cost savings may truly be the biggest issue, but for others, having a plan that suits them best is more important than cost differences. If you're one of those people, this study makes it clear that spending time studying the options is worth the bother.
  • Researchers say that it is very difficult to compare the quality of care between Medicare Advantage and traditional Medicare. But in analyzing how health care providers chose to care for patients with the same kinds of ailments, researchers found that patients enrolled in Medicare Advantage and nearing the ends of their lives were half as likely to use the emergency department as traditional Medicare patients and had 13 percent fewer hospital admissions. How you view that is a personal decision, but for me, less is more.

This study isn't good beach reading, but it does make clear that anybody who enrolls in Medicare without thoroughly analyzing their options is making a potentially costly mistake, both in terms of money and personal quality of care.

If you're unfamiliar with Medicare Advantage plans, here are some basics.

The original version of this blog post didn't cite the publication of the study. The study was published in The Milbank Quarterly, a multidisciplinary journal of population health and health policy.

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1 Comment
George
August 20, 2014 at 8:37 am

Great article and thank you very much for writing.

Please provide the name or some specific study reference as I would like to read the study. Searching with Google does not yield any results for me.

Thank you very much.

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