From 2012 to 2021, savings across Medicare are estimated to have been $111 billion compared to if Medicare Advantage penetration held at 2011 levels, according to an Elevance Public Policy Institute study published March 23 in INQUIRY: The Journal of Health Care Organization, Provision, and Financing.
The Elevance institute researchers looked across fee-for-service Medicare, MA and Part D. The team determined a 10 percentage-point increase in penetration would be linked to 1.5% less in total Medicare spending per capita. Researchers calculated the $111 billion figure relying on that assumption and looking at actual penetration over that time frame.
If using an adjusted percentage based on the Medicare Payment Advisory Commission’s coding intensity concern, the 10 percentage-point increase would be linked to a 1.1% spending reduction. In that case, estimated savings would have been $83 billion instead of $111 billion over that time period.
The 1.5% and 1.1% reductions would equate to $194 and $146 less in total Medicare spending per capita, respectively.
“Our study identified a strong association between MA enrollment growth and Medicare spending,” Jennifer Kowalski, vice president of the Elevance Health Public Policy Institute, told Becker’s. “If this relationship is even in part causal, then MA growth looks to have moderated Medicare spending over the last 15 years.”
Researchers estimated that lower FFS spending — possibly thanks to spillover, or providers changing behavior across the board to align with MA incentives as enrollment grows — contributed to about 52% of savings, and lower MA plan payments for MA members and Part D payments for all beneficiaries are attributable to roughly 38% and 6% of the savings, respectively.
The research comes amid intensifying MA scrutiny, with research from MedPAC suggesting steeper costs for traditional Medicare and higher payments for MA. But Ms. Kowalski and senior researcher Brett Alfrey, PhD, said these differences come down to methodology. For example, MedPAC sometimes issues projections or estimates, while Elevance’s research depended on historical data.
Ms. Kowalski also said distinguishing between original Medicare and MA was off the table.
“Medicare Advantage has an influence on the whole Medicare program,” she said. “I don’t think you can look at one or other in the vacuum. You really need to look at them together.”
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