Medicaid/Medicare Medicare Medicare Advantage

Was Newt Gingrich Right about Medicare?

In 1995, Newt Gingrich claimed that Medicare would end. He stated that “going to wither on the vine because we think people are voluntarily going to leave it — voluntarily.”  Was he right?

In the one hand, Medicare total enrollment and spending is rising and the program still has widespread political support.

On the other hand, the share of Medicare beneficiaries enrolled in the traditional fee-for-service program is falling. The Kaiser Family Foundation reports that whereas only 17% of beneficiaries enrolled in Medicare Advantage in 2000, by 2014 that figure has soared to 30%.

Medicare Advantage’s large increase in market share continues despite the fact that the Affordable Care Act cut reimbursement for Medicare Advantage plans by eight percentage points from their peak in 2009 (as measured relative to the cost of traditional Medicare coverage).

What explains this trend? Austin Frakt proposes some ideas:

  • Baby boomers are more accustomed to the types of insurance Medicare Advantage offers, such as H.M.O.s, than their predecessors were.
  • Employer-based coverage for the elderly is withering away. “[P]rior generations of retirees may have been more likely to have had coverage from former employers that wrap around traditional Medicare, filling in its gaps.” Fewer and fewer retirees have this option available to them.

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