Reducing Medicare Advantage Benchmarks Will Decrease Plan Generosity, But Those Effects Will Likely Be Modest

Michael E. Chernew; Keaton Miller; Amil Petrin; Robert J. Town

doi:10.1377/hlthaff.2022.01031

Reducing Medicare Advantage Benchmarks Will Decrease Plan Generosity, But Those Effects Will Likely Be Modest

Michael E. Chernew, Keaton Miller, Amil Petrin, Robert J. Town

Economics (Twin Cities)

Research output: Contribution to journal › Article › peer-review

6 Scopus citations

Abstract

Concerns that Medicare Advantage (MA) plans are overpaid have motivated calls to reduce MA benchmarks—the dollar amounts set by the Centers for Medicare and Medicaid Services (CMS) against which MA plans bid to set premiums and fund extra benefits. However, cutting benchmarks may lead to higher MA enrollee premiums and decreased plan generosity. We assessed the relationships between MA benchmarks and plan generosity and benefits. We estimated that a $1,000 per year decrease in benchmarks would lead to small increases in annual premiums of about $60 and increases in annual deductibles of about $27. Copays would also increase modestly, and the propensity to offer benefits would generally decline by less than 5 percentage points, with the greatest impact being on the availability of dental, hearing, and vision benefits. These results suggest that although cuts to MA benchmarks would adversely affect plan generosity, those effects would be modest.

Original language	English (US)
Pages (from-to)	479-487
Number of pages	9
Journal	Health Affairs
Volume	42
Issue number	4
DOIs	https://doi.org/10.1377/hlthaff.2022.01031
State	Published - Apr 2023

Bibliographical note

Funding Information:
Michael Chernew received grants from Arnold Ventures and the National Institute on Aging, National Institutes of Health. Chernew also sits on an advisory board for the National Institute for Health Care Management and is the chair of the Medicare Payment Advisory Commission. He received grants from the Health Care Services Corporation and Blue Cross Blue Shield Association, all related to the submitted work. Robert Town is past chair of the board/ board member for the Health Care Cost Institute. The authors acknowledge grant support from Arnold Ventures. All views represent those of the authors and not any of the organizations they are affiliated with.

Funding Information:
Michael Chernew received grants from Arnold Ventures and the National Institute on Aging, National Institutes of Health. Chernew also sits on an advisory board for the National Institute for Health Care Management and is the chair of the Medicare Payment Advisory Commission. He received grants from the Health Care Services Corporation and Blue Cross Blue Shield Association, all related to the submitted work. Robert Town is past chair of the board/ board member for the Health Care Cost Institute. The authors acknowledge grant support from Arnold Ventures. All views represent those of the authors and not any of the organizations they are affiliated with. [Published online March 22, 2023.]

Publisher Copyright:
© 2023 Project HOPE— The People-to-People Health Foundation, Inc.

PubMed: MeSH publication types

Journal Article
Research Support, Non-U.S. Gov't

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This output contributes to the following UN Sustainable Development Goals (SDGs)

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10.1377/hlthaff.2022.01031

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abstract = "Concerns that Medicare Advantage (MA) plans are overpaid have motivated calls to reduce MA benchmarks—the dollar amounts set by the Centers for Medicare and Medicaid Services (CMS) against which MA plans bid to set premiums and fund extra benefits. However, cutting benchmarks may lead to higher MA enrollee premiums and decreased plan generosity. We assessed the relationships between MA benchmarks and plan generosity and benefits. We estimated that a $1,000 per year decrease in benchmarks would lead to small increases in annual premiums of about $60 and increases in annual deductibles of about $27. Copays would also increase modestly, and the propensity to offer benefits would generally decline by less than 5 percentage points, with the greatest impact being on the availability of dental, hearing, and vision benefits. These results suggest that although cuts to MA benchmarks would adversely affect plan generosity, those effects would be modest.",

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Reducing Medicare Advantage Benchmarks Will Decrease Plan Generosity, But Those Effects Will Likely Be Modest

Abstract

Bibliographical note

PubMed: MeSH publication types

UN SDGs

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