When it comes to health coverage for seniors, Medicare and Medicare Advantage often come up in conversation. While both provide essential health benefits, they do so in very different ways. With Advantage’s share of the demographic projected to grow, understanding the Medicare vs Medicare Advantage differences and the implications of Advantage’s growing prevalence has never been more critical.
A recent piece by Becker’s Payers Issues featured an interview with Don Berwick, MD—a former Centers for Medicare and Medicaid Services (CMS) administrator. It sounded the alarm about the further weakening of the Medicare framework. Today, we’re exploring the Medicare vs Medicare Advantage debate by highlighting how they’re different, discussing the emerging issues with the rise of Advantage plans, and detailing the pressing need for insurers to engage more actively in controlling healthcare costs.
Breaking Down the Basics of Medicare vs Medicare Advantage
What is Medicare?
Medicare is a federal health insurance program primarily for people aged 65 and older. It consists of Part A (hospital insurance), Part B (medical insurance), and Part D (prescription drug coverage). Individuals can also purchase supplemental coverage (Medigap) to cover additional costs. As it’s issued by the federal government, you can see any doctor and/or medical services provider that accepts Medicare nationwide, without referrals. However, extra medical services (dental, vision, etc.) are not included, and there is no out-of-pocket maximum on costs.
What is Medicare Advantage?
Medicare Advantage, also known as Part C, bundles Parts A, B, and often D into one plan offered by private insurance companies approved by Medicare. These plans often include additional benefits such as dental, vision, and wellness programs, which are not typically covered by traditional Medicare. Since Advantage plans are issued by insurance companies, they rely on provider networks; you’re limited to in-network doctors and facilities except for emergencies. Most plans also have a cap on annual out-of-pocket expenses, limiting top-end costs for benefits.
Growing Enrollment and Issues of Medicare Advantage
The original mission of Medicare Advantage was to offer Medicare beneficiaries coordinated and proactive managed care, with the potential for reduced costs. To that end, Advantage has certainly resonated with the target population. Medicare Advantage is now the dominant form of Medicare, with a projected 54% share by the end of 2024 with more than 33 million enrollees.
But as more and more enrollees join Medicare Advantage, it is becoming clear that the growth isn’t a good thing for the long-term health of the Medicare system. Financial interests, particularly from the insurance companies issuing Advantage plans, have exploited the program. Issues such as upcoding and risk score manipulation inflate costs without necessarily improving actual patient care. Additionally, concerns about transparency and network adequacy persist, raising questions about the actual value of Advantage plans.
It’s all added up to a situation where Advantage plans are costing taxpayers, the Medicare trust fund, and beneficiaries more than traditional Medicare.
The Impact of Insurers in the Medicare vs Medicare Advantage Divide
Insurers have found Medicare Advantage to be highly profitable, often prioritizing earnings over patient-centered care. This profit-driven approach has resulted in practices that increase costs for everyone—from taxpayers to the very beneficiaries the program is supposed to help.
Experts, including Berwick, suggest numerous reforms to improve Medicare Advantage. These include overhauling the HCC coding system to prevent financial abuses, improving the transparency of Advantage plans, and enforcing stricter network requirements to ensure quality care is accessible. Berwick said Medicare Advantage has strayed too far from its original purpose and now threatens to cause irreparable harm to the entire system.
“I would like to see Medicare Advantage slowed or stopped,” Berwick said.
How to Correct the Course
To protect the future of Medicare, some propose enhancing traditional Medicare to offer benefits similar to those of Advantage plans, making the two options more comparable and cost-neutral for beneficiaries. This could be funded by redirecting the excess subsidies currently flowing to Advantage plans.
More importantly, insurers need to step up by focusing on genuine cost control and quality improvements. Collaborations with healthcare providers could foster innovations that lead to better health outcomes at lower costs, truly reflecting the original goals of Medicare Advantage. The state of healthcare and healthcare insurance in the US is complicated, burdensome, and difficult to understand. Berwick said it doesn’t have to be this way.
“Insurers need to be held accountable for lowering costs and improving quality at the same time—and lower costs are lower costs, not a calculation game of revenue that leads to an unfair distribution of Medicare expenditures,” he said.
Trust Lumina for Critical Medical Imaging Services
Understanding the nuances between Medicare and Medicare Advantage is crucial as these programs evolve. As Medicare Advantage continues to grow, the need for accountability and reform becomes more apparent. Beneficiaries must make informed choices, and insurers must commit to real improvements in care quality and cost efficiency.
At Lumina Imaging and Diagnostics, our goal is to address these same issues through our prism of medical imaging services—which are proudly offered to both program types. Our flat-fee pricing structure adds transparency for patients, employers, and benefits providers alike. Our focus on the patient—through modern, accessible locations, comfort-aligned features, and nearby locations—is designed to make it easy for them to get the imaging they need to make informed decisions about their care. With Lumina, patients get the hospital-quality MRI and CT scans required at a fraction of the hospital price.
Connect with our team today to learn more or to arrange your next imaging appointment.
