BCBSA Statement On GAO Report On Medicare Advantage

Statement from Scott P. Serota, President and CEO Blue Cross and Blue Shield Association

February 28, 2008

WASHINGTON - In response to the U.S. Government Accountability Office's report on Medicare Advantage (MA) released today, Scott P. Serota, president and chief executive officer of the Blue Cross and Blue Shield Association (BCBSA), issued the following statement:

"The U.S. Government Accountability Office (GAO) report validates the fact that the total out-of-pocket costs for Medicare Advantage (MA) beneficiaries are lower than for beneficiaries in traditional fee-for-service Medicare – with MA beneficiaries paying an estimated 42 percent of what beneficiaries in the traditional program pay in out-of-pocket costs.  While some beneficiaries may pay higher costs for certain individual health services, the report is clear that total out-of-pocket spending for MA enrollees is less.

"BCBSA's own analysis of existing Medicare data supports findings from the Centers for Medicare & Medicaid Services (CMS) which found that MA beneficiaries save an average of $1,032 per year through improved benefits and lower out-of-pocket costs – compared to what they would pay in the traditional Medicare fee-for-service program.  With about 9 million people enrolled in MA, that translates into an aggregate savings of more than $8.7 billion a year for Medicare beneficiaries.

"MA plans also meet the greatest challenge facing seniors – managing the care for those with chronic illness. This is especially true for the Medicare population – 82 percent of all Medicare beneficiaries have at least one chronic condition and 65 percent have multiple conditions.  MA plans play a crucial role in managing costs for beneficiaries with chronic diseases, such as asthma, diabetes, chronic obstructive pulmonary disease and congestive heart failure.  Our analysis found that MA plans provide the greatest benefit to these seniors in poor health with savings of up to 75 percent – or $4,064 – in 2006. *

"MA provides high quality, coordinated coverage to Americans.  BCBSA encourages Members of Congress to preserve and build upon the MA program and protect valuable MA benefits for millions of beneficiaries."

*The BCBSA analysis was created using MA plan data published in Health Affairs using a methodology developed by HealthMetrix Research, Inc.  The traditional Medicare data was prepared by BCBSA using the same methodology and verified by HealthMetrix Research, Inc.