Effect of an ACA Repeal on Medicare Advantage Plans
Do you have a Medicare Advantage plan, or are considering switching to one from original Medicare during the next Annual Election Period? If you thought that you wouldn’t be affected by what’s going on with the Trump administration and Obamacare, think again.
But while many Americans are nervous, wondering what the “repeal and replace” of the Affordable Care Act will mean to them and their healthcare coverage, things will likely get better for Medicare Advantage plan holders.
Medicare Advantage plans are sold by private health insurance companies. They essentially replace the coverage that would have been provided by Medicare, in addition to giving the policyholders some additional benefits. They proport to save the government money by utilizing in-place doctor and hospital Health Maintenance Organizations, networks, allowing them to tightly control costs. When a Medicare recipient indicates they would like to abandon Medicare in favor of a Medicare Advantage plan, the government pays all or part of the premium for the plan.
The way that the government calculates just how much it will pay is based on a pretty complicated formula, and those calculations changed when the ACA was in effect. As a result of the ACA, quite a bit of money was diverted away from Medicare, and subsequently from MA plans. But if the ACA repeal pushes through, those calculation methods will likely revert back to the way they were prior to the ACA, resulting in approximately $350 billion in spending on Medicare Advantage plans.
So that’s good new for Medicare Advantage plan participants, because it means those policies will likely get even cheaper, and monthly premiums will be lower.