Manhattan Institute February 28, 2019
EXECUTIVE SUMMARY
Medicare funds health-care services for 60 million elderly and disabled Americans. Of these, 39 million receive coverage through a plan known as “Traditional Medicare” or “Medicare Fee-for-Service” (MFFS) that the federal government administers directly. Increasing numbers—21 million in 2019—enroll in Medicare Advantage (MA), choosing Medicare coverage from competing plans managed by private insurers.
Medicare’s Fee-for-Service payment system has hampered appropriate coordination of care and inflated costs by paying separately for each medical procedure or service delivered to beneficiaries, regardless of their value. As every detail of its operation is highly politicized and hard to reform, MFFS has an outdated benefit structure that leaves elderly and disabled enrollees exposed to potentially catastrophic out-of-pocket costs.
By contrast, MA plans have...
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