Medicare turns 47 this summer, and it’s been an invaluable program for America’s seniors and the disabled. However, we all know how rapidly rising health care costs and demographic trends are threatening Medicare’s viability. Now is the time for policymakers and other stakeholders to engage in a frank conversation about the program’s future … and the private sector’s role in that future.

While Medicare alone does little more than process and pay beneficaries’ medical claims, the private sector – through Medicare Advantage (MA) and other Medicare offerings – is succeeding at helping people in Medicare live healthier lives, keeping their health care costs as low as possible.

There are lots of good reasons why enrollment in MA plans is growing so fast; it’s up 10 percent in 2012 over 2011 and MA now includes 25 percent of all Medicare beneficiaries. However, as more and more seniors are signing up for and enjoying their MA coverage, federal funding cuts that loom on the horizon threaten the success of MA.   

Why Medicare needs more of what the private sector provides

The private sector is making a significant difference in the lives of Medicare members by focusing on prevention, innovative delivery system models that better coordinate care, and programs to help patients adhere to recommended treatments. In fact, recent studies have found that:

  • Health plan programs that go beyond traditional care management lower preventable hospital readmissions by 25 percent to 35 percent
  • Medicare Advantage Special Needs Plans boost primary care and reduce hospital use among diabetes patients
  • Also, enrollees in many MA plans receive additional benefits beyond original Medicare, such as fitness programs and meal-delivery programs

People enrolled only in original Medicare benefit from none of the health-enhancing life-improving innovations delivered by the private sector. Given the role of the private sector in Medicare to date, there’s good reason to look for new ways to involve the sector in Medicare, as opposed to reducing its role.