Medicare Supplemental Insurance

The American Medical Association (AMA) published an interesting Fact Sheet* regarding Medicare Advantage (MA) plans. This is an important topic for our sales team because we continually find that many prospects and clients are misinformed about MA plans, and don’t understand their financial impact on the overall Medicare program. To help provide some additional clarity, we have extracted a few key bullet points from the AMA Fact Sheet:

• The AMA supports providing people with choices so they can pick the plan that best meets their needs. We (the AMA) also support injecting more competition into Medicare to help strengthen its sustainability.

• Medicare Advantage does not make Medicare more competitive, however. Because of the enormous subsidies that the government provides to these plans, the government is actually projecting that Medicare spending will increase more rapidly as MA enrollment grows than if everyone stayed in the regular Fee-For-Service (FFS) program. The statistics on payment rates show the magnitude of the problem:

• MA Plans are paid an average of 112% of FFS costs in the communities they serve.
• MA Private Fee-For-Service (PFFS) plans are paid an average 119% of FFS costs.
• The subsidy is worth $922 per MA enrollee, and eliminating it saves $54 billion over 5 years.
• The Medicare Payment Advisory Commission (MedPAC) estimates that all Medicare patients, not just those enrolled in MA, pay $2 per month more in Part B premiums due to the MA subsidy.

• The AMA supports financial neutrality between regular Medicare and Medicare Advantage plans. The AMA concurs with MedPAC that “the Medicare program should pay the same amount, adjusting for the risk status of each beneficiary, regardless of which Medicare option a beneficiary chooses.”

We remain committed to the notion that even though MA plans can work well for some people, over the long haul, traditional Medicare Supplement policy is the most cost effective health care solution for many seniors.

*Source: American Medical Association Fact Sheet,

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