Medicare Advantage 2021 to 2035 (Part 6)

Medicare Advantage 2021 to 2035 (Part 6)

In previous blogs, we have noted that Medicare is different things to different interested parties. Whether it’s the patient or beneficiary, it is literally access to life-or-death healthcare at both of their most vulnerable financial state post-retirement, and a safety net to make sure they have access to medical care when they really need it. Additionally, it is a herculean challenge for policy makers because of the 70 million Baby Boomers in Medicare or those who are about to become eligible for Medicare as they reach age 65. New drugs and treatments claim that life expectancy will continue increasing in a post-COVID world, whether the virus is conquered, or we all learn to live with it. It is also a material financial risk for medical care providers, who have seen inflation adjusted Medicare reimbursement drop consistently nearly every year for over 20 years.

As we publish this blog, the U.S. government has announced the “Cost of Living Adjustment” (COLA) for those that receive Social Security will be a stunning 5.9% increase, giving the average senior about $92 per month more. That could be offset by a large increase in the Medicare Part B premiums those same beneficiaries receive; though, as of this release, that amount has not been published. However, the net result is that these increases are the largest in 40 years and thankfully they are offsetting, at least to some degree. Why does that matter to us in this blog?

Physicians’ reimbursement is set by historical standards to increase only 1% each year. That is always subject to change however, I would not bet on it. So, assuming the above facts, and the historical decrease in inflation, the adjusted reimbursement will place physicians, who depend on Fee-for-Service medicine, in more acute trouble. This is in addition to the unprecedented challenges faced during the COVID-19 shutdowns last year, the limited return of patients, and the incredible challenges in keeping and attracting patients. We personally know that with COVID stimulus checks, deferral of evictions and foreclosures, many people have left for other places, and some of those are the medical and support staff doctors who need to operate their practice. Furthermore, some physicians have simply closed their offices for good as they have had enough.

We believe that the Medicare Advantage program is going to explode in the coming years, to the benefit of patient, providers who participate and do it well, and to policy makers looking at way to reduce the rate of increase of Medicare costs. That is a huge deal as the Trustees of the of Medicare program are alerting that one of the Medicare “Trust Funds” for Medicare Part A (hospital insurance) will have more money going out than is coming in by 2027, or it will become technically insolvent. We will talk more about this in a future blog, as well as the legislation intending to add additional benefits to Medicare Part B (physician services). Some of those services are dental, vision and hearing expansions, and nearly all services patients get if they belong to a metropolitan based Medicare Advantage program.

We’ll also talk about the increasing consumerization and even the evolving retail segment of healthcare as traditional retail companies, like Walmart and indirectly like Amazon Care, expand into healthcare directly. We have learned that a few other retail companies have made major headlines, like BestBuy, the giant electronics and appliance retailers, as well as much smaller companies such as Dollar General, who are beginning to test the water in “senior care” via remote patient monitoring and opening physical retail clinics.

-Noel J. Guillama, Chairman