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Policy Briefs

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Medicare Advantage vs. Traditional Medicare

Medicare is a government program that helps older people and some younger folks with disabilities get healthcare. There are two main ways to get Medicare coverage: Traditional Medicare and Medicare Advantage.

Traditional Medicare is like a big group plan for everyone who qualifies. People pay monthly fees, and it helps cover doctors and hospitals all over the country. Sometimes, though, there are extra costs that people need to pay, including portions of care not fully covered by Medicare, including prescription drugs. Some folks also buy so- called "Medigap" and “Part D” policies to help with these extra costs.

Medicare Advantage is a bit different. It's like joining a special club run by private insurance companies. They have their own rules about which doctors and hospitals you can use, and they might say no to certain tests or treatments. They can offer extra things like dental or vision care, which Traditional Medicare doesn't cover.

In recent years, more and more people have been picking Medicare Advantage because of these extra benefits. It's become popular, with almost half of all Medicare recipients choosing it in 2022. It’s profitable for the insurance companies, costing the government $321 more per person compared to traditional Medicare in 2019. That's why insurance companies advertise it a lot. Some people say we should make Medicare better instead of giving insurance companies so much money.

In the end, whether you choose Traditional Medicare or Medicare Advantage depends on what's most important to you. Traditional Medicare gives you more freedom to pick your doctors and other healthcare providers and has fewer restrictions on coverage for tests and treatments ordered by your doctors. Medicare Advantage has extra perks, but more restrictions on care. And there's ongoing debate about which one is better for everyone.

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Medicaid Coverage Post-Pandemic

Medicaid is a program that helps low-income people get medical care. It started in 1965 helping low-income children, pregnant women, and older adults. In 2010, the Affordable Care Act (ACA) allowed states to make Medicaid available to more people. In the states that agreed, adults between 19 and 64 with incomes below 138% of the poverty level and pregnant women with incomes below 200% of the poverty level could join Medicaid. Now, 40 states and the District of Columbia have expanded Medicaid, but 10 states haven't.

Kentucky expanded Medicaid in 2014, covering around 1.5 million residents, or one in three Kentuckians, prior to the COVID-19 pandemic. During the pandemic, a law was passed to allow people to stay on Medicaid without the need for requalification, recognizing the economic challenges brought about by COVID-19.

However, as of April 30, 2023, the rule suspending requalification checks ended. Some states have already started removing people from Medicaid, even if they remain eligible. It is estimated that as many as 15 million people, including 5 million children, are at risk of losing Medicaid coverage. In Kentucky, 250,000 people are at risk for losing Medicaid coverage.

Expanding Medicaid during the pandemic significantly increased health coverage. Discontinuing continuous Medicaid enrollment is expected to raise the number of uninsured individuals, posing risks to public health and hospital finances.

 

For more information, see Kentucky Voices for Health Medicaid Renewals Explainer. At the end of the day, a better system would be one in which everyone has health care from birth to death, improving health and helping hospitals avoid losses from unpaid care.

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The U.S. vs. the World

Healthcare in the United States is the most expensive in the world. Many Americans have coverage through private insurance while others have Medicare or Medicaid coverage through the government. Nearly 30 million Americans have no insurance at all.

 

When you think of health insurance in the U.S., you think about coverage provided through an employer. The employer pays a larger share of the cost and the employee may pay a smaller amount. When the employee needs to see a doctor, get medication, or receive hospital or emergency care, they may pay additional amounts through what are called deductibles and co-payments. What you may not know is that this form of coverage is unique to the U.S.

 

Not every employer is required to provide insurance coverage. The U.S. is the only rich country in the world that doesn’t guarantee health care coverage for everyone. The Affordable Care Act of 2010 increased access to coverage, but in 2022, more than 12% of adults 18-64 in the U.S. were uninsured. An additional 20% of Americans lose coverage temporarily, such as when changing jobs.

 

In contrast to the U.S., governments in wealthy countries including Canada, Norway, Germany, and England all provide basic health insurance for all residents. Private insurance is available in many of those countries, but each of them share the goal for all residents to have access to healthcare regardless of their ability to pay. Switzerland’s healthcare system is the closest to that of the U.S., using a combination of private coverage and public coverage from the government. However, everyone in Switzerland has basic healthcare coverage and employers do not provide health coverage except for accident-related workman’s compensation.

 

In each of these 5 other countries, people live an average of 3.67 years longer than they do in the U.S. and the yearly cost of healthcare is about 46% less per person than in the U.S.

 

Providing healthcare for everyone is no different than providing public libraries, a police force, or fire department.

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