This option was started under the 2nd Bush administration under the belief that an HMO-like product operating as a for-profit insurance option could lower costs through care management, wellness, and prevention. Medicare Advantage plans cover about ¼ of all Medicare beneficiaries and have been more expensive than traditional Medicare since its inception. They have continued under the Obama administration.
In addition, several previous studies have found that Medicare Advantage plans have healthier patients on average than traditional Medicare. They do this in part through enrollment techniques such as advertising at senior fitness centers.
The failure of Medicare Advantage to control costs serves as a cautionary tale of the limits of free enterprise using for-profit insurance companies to lower U.S. healthcare costs. These plans did not fundamentally alter the doctor-patient relationship, nor did they confront the POEM assumptions. Therefore, they were doomed to failure.
To drastically lower U.S. healthcare costs, we have to dig deeper. We have to talk about concepts such as risk, primary care, humility, evidence, and cost-effectiveness. Otherwise, it’s just another for-profit insurance company clueless about the true drivers of U.S. healthcare costs stealing more resources from the rest of the U.S. economy in the form of fewer jobs and lower wages for everyone else.