Congress must address the looming tax on seniors in Medicare Advantage

Congress must address the looming tax on seniors in Medicare Advantage
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Exit polls from the midterm election highlighted health care as a top voter concern and there is keen anticipation that Congress will want to act to address health-care costs that impact so many Americans. However, before health-care debates next year, there is work to be done before Congress ends this session. Action is required to protect seniors from cost increases in Medicare.

Lame-duck sessions are rarely easy, particularly when there is a change in the majority party, as there is this year in the House. Nonetheless, Congress would be remiss if it does not address the looming tax on seniors in Medicare Advantage.

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At a time when Americans are looking for help to lower health-care costs, a tax on Medicare and Medicaid beneficiaries enrolled in Medicare Advantage plans called the Health Insurance Tax (HIT) would be detrimental for millions of disabled and older adults who do not have the resources to absorb an increase in out of pocket costs.

Currently, the scheduled $16 billion tax will impact over 20 million seniors and disabled individuals enrolled in Medicare Advantage. Congress recognized the negative consequences of this tax and wisely delayed the HIT in 2019. Without Congressional action in the lame-duck session, the tax will return in 2020 creating instability, raising costs for beneficiaries, and reducing access to the coverage beneficiaries value its affordability, simplicity, supplemental benefits and care management.

The fact is, more than 25 percent of the HIT will be paid by Medicare Advantage beneficiaries, most of whom live on fixed annual incomes and more than one-third of whom live on less than $20,000 per year. Experts predict that return of the HIT in 2020 would mean an increase of $241 in annual premiums for the average Medicare Advantage enrollee or $3,052 over the next ten years.

Increasing costs for beneficiaries that would result from this tax directly contradict the successful efforts plans have accomplished in lowering costs for beneficiaries. Recent reports by Centers for Medicare & Medicaid Services (CMS) show that Medicare Advantage continues to drive down out-of-pocket costs for beneficiaries. The average Medicare Advantage monthly premium will decrease for a second year in a round, with next year’s premium anticipated to be reduced by 6.5 percent to $28.00 per month. For almost half of enrollees, costs are even lower, as they have chosen to enroll in zero-premium plans.

Benefits have also expanded, with Medicare Advantage plans continuing to innovate in benefit design and care delivery to meet the needs of beneficiaries. Recent data indicates that over 270 Medicare Advantage plans will offer new, health-related supplemental benefits in 2019. In addition to dental, vision, hearing, wellness programs and reduced cost sharing now offered by many plans, these additional benefits may include adult day care services, in-home support services, caregiver support services, as well as reduced cost-sharing for targeted groups of beneficiaries with certain conditions. It is anticipated that there will be further flexibility allowed to provide support services for those individuals with chronic conditions in 2020.

Delaying the HIT offers greater stability for plans and providers to sustain the move to value-based care lead by Medicare Advantage. Early identification of health risk and patient engagement to reduce disease progression are hallmarks of Medicare Advantage. Continuity and stability for these plans, providers, and the beneficiaries they care for, would support the growing body of evidence that Medicare Advantage is providing high value care through innovative care delivery and payment arrangements that are meeting the needs of Medicare beneficiaries, especially those with complex needs. 

This is all good news for payers, providers, beneficiaries, and the Medicare program. It is made possible by a stable environment for investments in these innovations and the strong, positive bipartisan support for Medicare Advantage.

Modernizing Medicare to promote preventive care and early intervention; reduce hospitalizations and unnecessary emergency room visits, with the goal of improving outcomes and lowering out of pocket costs, is an essential. Medicare Advantage is proving that it can be done. With more and more Medicare beneficiaries choosing Medicare Advantage as the way they receive their Medicare benefits, it will have a greater impact on older adults in the years ahead. Protecting these beneficiaries next year and beyond from increased premiums on their health coverage is critical. 

As Congress finishes its work this year, we urge the House and Senate to preserve the innovations and consumer protections available in Medicare by delaying the Health Insurance Tax and protecting Medicare Advantage beneficiaries from this unintended tax.

Former Rep. Allyson Y. Schwartz (D-Pa.) is president and chief executive officer of the Better Medicare Alliance.