Medicare+Choice Bills May Stop Exodus of Plans,
But Are Not Likely to Expand Enrollment in HMOs

Health Affairs Article Says Medicare Managed Care Program
Helps Low-Income People but Suffers from Conflicting Goals

BETHESDA, MD–As Congress considers legislative proposals aimed at saving Medicare+Choice, a new study published today on the Health Affairs Web site shows that under the best-case scenario, enrollment in the troubled managed care program would stabilize at about 5 million beneficiaries.

Under the worst case of the four policy proposals to boost sluggish M+C reimbursement, enrollment would shrink to just 3.3 million by 2005, according to the article by health care scholars Kenneth E. Thorpe and Adam Atherly.

These findings are important for low and moderate-income beneficiaries, who make up 55 percent of M+C enrollees and rely on M+C plans because they cover drugs and other supplemental benefits. The authors found that M+C plans provided $6 billion in added benefits to enrollees in 2001 when compared to the Medicare fee for service benefit package. If M+C were completely eliminated, the authors write, more than 30 percent would end up with Medicare coverage only, raising the number of beneficiaries with no coverage for drugs and other supplemental services to 6.5 million from 5 million.

The authors analyze M+C payment rates and likely enrollment through 2005 under four different policy options. President Bush's M+C proposal would yield a stable enrollment, declining from 5.3 million today to about 5 million in 2005. A plan authored by Rep. Nancy Johnson (R-CT), similar to legislation the House of Representatives has already endorsed, would result in a decline of about 1 million enrollees by 2005. A proposal by the Medicare Payment Advisory Commission would cause enrollment to drop by 2 million, to 3.3 million, and current law would result in a 2005 enrollment of 4.1 million.

The authors conclude that the program has been hampered by conflicting policy goals since passage of the Balanced Budget Act of 1997. Policymakers want M+C to reduce health care cost growth, provide a stable supplemental benefits package, and expand into underserved areas. The authors urge policymakers to give more clearly defined and focused expectations if they want M+C to be a major part of Medicare reform in the future.

Health Affairs, published by Project HOPE, is a bimonthly multidisciplinary journal devoted to publishing the leading edge in health policy thought and research.

©2002 Project HOPE–The People-to-People Health Foundation, Inc.