Medicare is in trouble, and it’s largely the fault of the Medicare Advantage program that is run by private insurers, according to Donald Berwick, who ran Medicare during the Obama administration.
More than half of people on Medicare are enrolled in private Medicare Advantage plans, and MA’s share of the market is growing fast.
Medicare pays Medicare Advantage plans a set annual rate for each enrollee. This arrangement is supposed to encourage insurers to do what’s needed to keep enrollees healthy, instead of only providing services that Medicare covers. But the complicated system for calculating MA pay rates, which incentivizes heavy coding to make patients look really sick on paper, results in taxpayers paying over $80 billion more annually for people in Medicare Advantage than those in traditional Medicare.
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