Medicare Advantage - Effects of The Health Reform

Effects of The Health Reform

There is considerable confusion about what the Patient Protection and Affordable Care Act (or ACA) of 2010 did with respect to Medicare Advantage. As part of a broad set of reforms aimed to control the cost of Medicare, the ACA eliminated subsidies which the federal government first used to establish the Medicare Advantage program. The Obama administration launched an $8.35 billion demonstration project to postpone the majority of Medicare Advantage program cuts. According to the Government Accountability Office (GAO) this demonstration project will cost more than the combined previous 85 demonstration projects beginning in 1995. As of 2008, the federal government spent 12 percent more on Medicare Advantage than it did for comparable care under traditional Medicare. These subsidies (which added an additional $14 billion to the Medicare program last year alone) will gradually be reduced until payments to Medicare Advantage are in line with the cost of traditional Medicare.