Examining New York’s Medicare Advantage Plan Landscape in Light of Payment Reform

The Patient Protection and Affordable Care Act (ACA) provided for cost savings in the Medicare program, in part to underwrite coverage expansion to Medicare beneficiaries, to finance new coverage for those not eligible for Medicare and to strengthen Medicare’s financial outlook. One cost-saving measure, a reformulation and reduction in payments to private health insurance plans that provide Medicare benefits through the Medicare Advantage (MA) program, had a sound policy basis but was criticized, particularly by opponents of the ACA, as a measure that would lead to increased costs, reductions in benefits and diminished plan choices to Medicare beneficiaries enrolled in MA plans. Despite dire predictions to this effect, a review of a sample of MA plan offerings in New York State in 2012 shows that Medicare beneficiaries enrolled in such plans did not experience significant benefit reductions or increased costs. While the number of plan offerings decreased, the reduction was mostly due to the elimination of duplicative plan choices in 2011.