clock menu more-arrow no yes mobile

Filed under:

Everyone thought Obamacare would kill private Medicare plans. Everyone was wrong.


When Obamacare first became law, Medicare Advantage plans seemed to be near-certain losers in the deal.

These are the private health insurance plans that contract with the federal government to provide coverage to seniors. And Obamacare cut their reimbursement rates by $156 billion over a decade, in order to help pay for the health law's insurance expansion.

As a result, the Congressional Budget Office predicted the program's enrollment would fall from 11.7 million enrollees in 2011 to 7.5 million in 2018.

That's why it's so surprising to see that Medicare Advantage enrollment is now at an all-time high, contrary to all expectations. Tricia Neuman from Kaiser Family Foundation recently posted this chart:

ma enrollment

Medicare Advantage enrollment is marching steadily upward while reimbursement rates have moved steadily downward. Enrollment in Medicare Advantage was already on the rise prior to the Affordable Care Act, and it appears the trend has continued post-Obamacare, too.

How did that happen? Medicare Advantage plans seem to be learning to live within their new budgets — which, when you think about it, aren't actually that stringent. Since 2004, these private plans have earned more per member than the traditional government-run option spends on covering beneficiaries.

The whole idea of the Obamacare cuts was to bring the payments to Medicare Advantage plans more in line with what the federal government spends. You can see that in the figures above: Medicare Advantage reimbursement rates have dropped from 109 percent of what the government plan pays in 2010 to 102 percent this year.

The cuts are significant, for sure. But the decline in enrollment? There just isn't evidence that it's actually happening — or will actually happen in the future, either.

WATCH: 'The dysfunction of the American health-care system'

Sign up for the newsletter Sign up for Vox Recommends

Get curated picks of the best Vox journalism to read, watch, and listen to every week, from our editors.