Cost Savings and More Benefits: Tides Shift toward Medicare Advantage, but Slowly
Many older adults do not understand or know how Medicare Advantage could be better for them.
Behavioral economics has taught us that most people select the default choice when presented with an issue that they don’t know well, and the default choice is Original Medicare for seniors. It’s simple to preserve the plan you know year after year, but what about the plan you don’t know?
A recent study explored the extent of awareness for options among Medicare beneficiaries. The data show a knowledge gap for Medicare Advantage. Among respondents enrolled in Original Medicare, 30% stated they were not familiar with Medicare Advantage. This means nearly one in three people 65 or older do not know if there’s a better plan for them.
The next decade is going to represent a demographic shift like few in history. By 2030, the entire Baby Boomer generation (1946 to 1964) will be 65 and older. Moreover, this generation will live longer than any before, which will bring greater health challenges and unpredictability. As the Chief Medical Officer of GoHealth, I know there are resources to shepherd this generation through the aging process. Still, what good are resources when they’re unused or, worse, unknown?
The State of Health
According to the CDC, about 85% of older adults have at least one chronic condition, and 60% have at least two. Medicare beneficiaries with two or more chronic diseases represent 94% of Medicare expenditures while accounting for only 60% of total members. Seniors who have more than two chronic conditions consume around $11,000 more annually in health services than those who do not. A study from the National Academy of Sciences reports that lower socioeconomic status increases the risk of many of the long-term health problems of aging and declining function. So then the question is, how can older adults overcome social barriers and receive both medical and social services capable of improving health?
Close the Knowledge Gap
The acceleration of Medicare Advantage over the past ten years is indisputable. In 2010, according to Kaiser Health News, 11.1 million Americans chose Medicare Advantage over Original Medicare. Fast forward to 2020, that number is more than double, with 24.1 million Americans enrolled in Medicare Advantage.
In 2020, Medicare Advantage plans were allowed to expand benefits based on many things, including qualifying chronic conditions. However, with 60% of the population reporting two or more conditions, only 39% of Medicare beneficiaries enrolled in a Medicare Advantage plan. For those 36% that don’t know that Medicare Advantage can offer extra benefits, they may be leaving money and extra help on the table.
A Benefits Boost
Recent survey data presented yardsticks regarding the understanding of the value between Original Medicare members and Medicare Advantage members. Of the Medicare Advantage respondents, 54% cited extra benefits, and 78% cited cost savings as reasons for their choice. Meanwhile, of the Original Medicare respondents, 30% thought Medicare Advantage was more expensive, and 36% did not know Medicare Advantage offered benefits Original Medicare did not.
Still, the message for Medicare-aged individuals is that one plan is not better than another when it comes to Medicare. For beneficiaries and the healthcare system, health insurance must support the needs of the individual. As older adults begin to prepare for what might lay ahead in retirement, Medicare Advantage is one way to protect themselves from unexpected health conditions and costs.
The truth is that anyone who doesn’t know all their options can’t possibly be prepared to make the best decision. When you consider the Medicare population and aging Americans’ needs, it is critically important that more seniors understand Medicare options and benefits.
As more older adults take charge of their health, one thing rings true. Not having a plan can be hazardous to your health. People are working and living longer in the U.S. According to the Office for Economic Cooperation and Development (OECD), Americans age 65 in 2021 have an additional life expectancy of 19.2 years.
In the general population, individuals with multiple unmet social needs are 2.6 times more likely to report poor physical health, 5.9 times more likely to report poor mental health, and more than twice as likely to report high healthcare utilization. Maintaining or improving your health after 65 means you must account for social health risks and have a plan.
Upon turning 65, there are many healthcare coverage decisions to be made. Medicare Advantage vs Original Medicare is one of them, but if Original Medicare is selected, then there are more decisions about Part D and Supplemental Coverage. Clearly, Medicare Advantage bundles many different pieces together in one place for seniors.
When we look ahead to changing the aging process’s outcomes, the patient centered care will be critical. Change requires healthy intervention and resources to support prevention, and aligned incentives, such as in Value Based Care.
So, where does your Medicare plan fit in all of this?
Medicare Advantage plans are moving away from the traditional paradigm of treating the disease at the point of care and towards expanding benefits to include interventions that address social risk and promote prevention. The CHRONIC Care Act passed in 2017 but in 2020 expanded to pave the way for more community-based preventive care, not just treatment.
In 2019, the law expanded possible benefits to include adult daycare, pain management (excluding opioid Rx), support for caregivers, and home assistance, e.g., wheelchairs and ramps.
In 2020, Medicare Advantage plans could expand to offer unique supplemental benefits for the chronically ill. These are limited to members who: 1) have at least one complex chronic condition that is life-threatening or significantly limits overall health or function, 2) are at high risk of hospitalization or other adverse health outcomes, and 3) require intensive care coordination. These benefits could include transportation to a pharmacy or grocery store, healthy meal delivery, home repairs to accommodate wheelchairs.
Does it matter?
Take a moment to consider that nearly 40% of Medicare enrollees have at least one unmet social need. We know that where someone lives and their access to healthy resources plays a critical role in their health. Now take a moment to consider that 30% (or roughly 1 in 3) Original Medicare beneficiaries are either not at all familiar or unsure about Medicare Advantage (Part C) plans. Another 53% are only “somewhat familiar” with Medicare Advantage plans and that lack of knowledge could cause them to miss out on non-medical resources.
The healthcare ecosystem is a broad spectrum of providers, facilities, resources, and payers. All exist to engage populations on many levels to prevent and improve health and outcomes. Whether reducing social risk factors, preventing the onset of chronic disease through behavior change, or detection and treatment at the point of care, the system’s appropriate utilization drives positive change and better outcomes. Medicare provides options to integrate and coordinate health care across populations but is only successful if beneficiaries understand how to use the benefits available to them.
The tides are shifting toward Medicare Advantage, but adoption is still lacking. Original Medicare paired with additional plans are an excellent option for many but can become cost-prohibitive to large populations in need of disease management and care coordination. In contrast, Medicare Advantage is a cost-effective option for people eligible for Medicare but challenged by economic insecurity. In the U.S., 15 million (or roughly 1 in 3) older adults face the burden of health costs with incomes below 200% of the Federal Poverty Level.
Medicare Advantage plans are opening the door to better physical and mental health outcomes and utilization. And with every small step in the direction of early intervention and prevention, the health system’s burden improves along with the physical and financial health of Medicare Advantage members.
Medicare Advantage can be a lifeline to many seeking cost-effective coverage that unlocks access to services that help mitigate risk factors. Managing health conditions without obstacles can be hard enough, especially when the barrier is simple as learning the extent of what Medicare can offer. Knowing all your options is half the battle.
About GoHealth, Inc.
GoHealth is a leading health insurance marketplace and Medicare-focused digital health company. Enrolling in a health insurance plan can be confusing for customers, and the seemingly small differences between plans can lead to significant out-of-pocket costs or lack of access to critical medicines and even providers. GoHealth combines cutting-edge technology, data science and deep industry expertise to build trusted relationships with consumers and match them with the healthcare policy and carrier that is right for them. Since its inception, GoHealth has enrolled millions of people in Medicare plans and individual and family plans. For more information, visit https://www.gohealth.com/.