Traditional Medicare now covers < 50% of Medicare beneficiaries. It reimburses on a fee-for-service basis. For beneficiaries, it includes deductibles and coinsurance requirements that yield average annual out-of-pocket expenses measured in the thousands of dollars.
Medicare Advantage, the new alternative, has grown quickly. Plans typically promise beneficiaries fewer co-pays and more services. It relies on private insurers (think United, Blue Cross, Kaiser Permanente) to coordinate care and rein in costs. Subsidies to Medicare Advantage have helped spur growth, subsidies that mean costs per beneficiary for Medicare Advantage exceed those for traditional Medicare.
Which means Medicare still needs to figure out how to save money and remain viable while the US population over 65 grows.
When listening to a lecture about Medicare or reading a study that uses Medicare data, take a moment to ask “Which Medicare? Fee-for-service? Or Advantage?”
For a take on the future of Medicare, see McWilliams JM, The Future of Medicare and the Role of Traditional Medicare as Competitor, NEJM, August 22/29, 763-769.
