Heritage Report: State-by-State Impact of Medicare Advantage Cuts
In case you hadn’t yet seen, I wanted to pass along this helpful report from the Heritage Foundation, released earlier today, about the impact of the health care law on Medicare Advantage (MA) beneficiaries. The report takes the original estimate by the Medicare actuary that the MA provisions in the health care law would cut program enrollment in half by 2017, and uses those assumptions to generate more detailed analysis about the law’s effects. Among the key findings:
- By 2017, the reduction in Medicare Advantage benchmarks – coming from both the direct reductions in MA benchmark levels under the law, and the indirect reduction in benchmark levels as a result of reductions in traditional Medicare’s spending – will average $3,714 per beneficiary. In addition, “the new formulas will reduce every county’s benchmark for 2017 relative to its projected benchmark for 2017 under prior law.”
- The report provides state-by-state breakdowns of the reduction in MA benchmarks when compared to prior law. The impact is projected to vary from an average cut per beneficiary of $2,985 in North Dakota to $5,092 in Louisiana.
- Most importantly, the report also provides a state-by-state breakdown of the impact on MA enrollment in 2017 compared to prior law projections. Effects range from a 38% enrollment reduction in Montana to a 62% reduction in Louisiana – with MA enrollment in the District of Columbia dropping by more than two-thirds (67%), and enrollment in Puerto Rico plummeting by 84%. The map on page 9 of the report provides more information, and a chart on page 12 names the 30 counties with the steepest projected drops in enrollment.
- When broken out by ethnicity, the MA provisions will cause Hispanics to lose $2.3 billion in benefits, with 300,000 losing access to MA plans. African-Americans will lose $6.4 billion in benefits, with 800,000 losing plan access.
- When analyzed by income, “more than 10.3 million Medicare beneficiaries with incomes under $32,400 in today’s dollars are projected to lose a total of $38.5 billion per year” in benefits. Fully 70% of the cut to MA will be absorbed by seniors with incomes under $32,400 – and more than 5 million of these low-income seniors will lose access to an MA plan.
- The Medicare Advantage cuts will increase Medicaid spending – because many dual eligible beneficiaries currently participating in MA, and receiving extra benefits from their MA plans, do not feel the need to sign up for Medicaid. However, as a result of the health care law, an estimated 472,000 dual eligibles will lose their MA plan, increasing Medicaid costs by a total of $924 million – $401 million of which must be borne by states.
- Because MA plans offering drug coverage currently bid about $11 per month less to offer prescription coverage than stand-alone Part D drug costs, Medicare Advantage has had the effect of lowering total Part D spending. However, as a result of the MA cuts included in the health care law, Part D spending is projected to increase by $1.5 billion per year.