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Health Reform, Medicare Advantage, and Care for America’s Seniors

With health reform now law, Communications Director Dan Pfeiffer puts forth the evidence that scare tactics about Medicare were unfounded.

It’s a favorite talking point among opponents of reform that the new health reform law will threaten Medicare or weaken guaranteed benefits for seniors enrolled in Medicare Advantage plans – when the truth is that law strengthens Medicare and overall health care for our seniors.
When it comes to Medicare Advantage, the new law simply puts these privately-administered plans on equal footing with traditional Medicare by cutting wasteful subsidies that pad insurance company profits. And a news story out yesterday makes it clear, in the words of the insurance company executives and health care experts, that Medicare Advantage plans and the seniors who use them won’t be hurt by the health reform law:

From Bloomberg News:

Stephen J. Hemsley, chief executive officer of UnitedHealth Group Inc., told analysts on an earnings call this week that reduced payments won’t keep the company’s products from competing with Medicare insurance offered directly from the government. Kathleen Sebelius, the Health and Human Services secretary, told a House Appropriations subcommittee that she expects “a robust array of choices for Medicare recipients.”


Insurers offering the plans could pressure health providers to lower their prices, McGlynn said. Also, Senate Democrats and the White House “did some smart things” to mitigate the effect of the Advantage cuts in the final version of the health law, said Robert A. Berenson, a former Medicare official now at the Urban Institute, a research foundation in Washington.

The law lets Advantage plans operating in areas where Medicare’s costs are lower than private insurers’ costs be paid more than the government program, said Berenson, who served in the Clinton administration. Plans where Medicare’s costs are higher than private insurers’ costs would get less.

Beginning in 2014, Advantage plans can earn 5 percent bonus payments if they implement programs to improve the health of their customers or the efficiency of care, he said. Insurers could qualify if they created programs to manage chronic diseases, for example, or new payment systems for doctors.

More broadly, the health reform law signed by the President strengthens Medicare by taking aggressive new steps to fight waste, fraud, and abuse within the system and reforming the payment system to reduce unnecessary hospital admissions and reduce health care acquired infections.  Together, these proposals will extend the financial health of Medicare by 12 years.  On top of that, not a penny of Medicare taxes or trust funds will be used for health reform.
In fact, the law is packed with improvements for all seniors. To name a few, the bill:

  • Closes the “donut hole” in Medicare prescription drug coverage;
  • Provides for free preventive care under Medicare, whereas seniors today often pay 20 percent of these costs;
  • Invests in innovations in new ways to treat and control chronic disease;
  • Creates news standards to improve the quality of care in nursing homes.

To learn more about the benefits that the Affordable Care Act offers America’s seniors, see our fact sheet.

Dan Pfeiffer is White House Communications Director