Comparing apples with oranges: administrative expenses and finances in Medicare systems.

OBJECTIVES: Proponents of a single-payer or public option health care system often cite the lower administrative expenses in public Medicare compared with those in private Medicare, claiming that this difference represents efficiency. We check the validity of this comparison in terms of accuracy and definitions and suggest expanding its scope to include expanded financial data of the 2 Medicare systems. STUDY DESIGN: Using annual Medicare Boards of Trustees and National Health Expenditure Accounts data from CMS and health insurers' financial statement data, we compare the level and percentage of the administrative expenses of the Medicare systems and show incompatible and not reconcilable definitions of administrative expenses. We expand our analysis to income, benefits, gains and losses, and loss ratios of the programs. METHODS: Our methodology is a careful comparison of categories of expenses between public and private insurers using official data sources. The comparison is both qualitative and quantitative. RESULTS: We validate the low administrative expenses of Medicare parts A, B, and D (1.35% of benefits in 2018) compared with Medicare Part C (10.86% of benefits without loss adjustment expenses [LAE] and 14.84% with LAE for 2018). Expanding the focus, the income and benefits per beneficiary grew faster and larger in Medicare parts A, B, and D than in Medicare Part C-a reversal of earlier trends. The public Medicare program suffered losses in 11 years during 2002-2018, whereas private insurers' Medicare remained solvent with about an 85% loss ratio. CONCLUSIONS: Comparisons of the systems in the United States would benefit from expanding the focus beyond incomparable administrative expenses. For the current period of coronavirus disease 2019, if the trends continue, public Medicare may suffer greater deficits relative to the private Medicare Part C.

Out-of-Pocket Spending for Influenza Hospitalizations in Medicare Advantage.

INTRODUCTION: Although many Medicare Advantage plans have waived cost sharing for COVID-19 hospitalizations, these waivers are voluntary and may be temporary. To estimate the magnitude of potential patient cost sharing if waivers are not implemented or are allowed to expire, this study assesses the level and predictors of out-of-pocket spending for influenza hospitalizations in 2018 among elderly Medicare Advantage patients. METHODS: Using the Optum De-Identified Clinformatics DataMart, investigators identified Medicare Advantage patients aged ≥65 years hospitalized for influenza in 2018. For each hospitalization, out-of-pocket spending was calculated by summing deductibles, coinsurance, and copays. The mean out-of-pocket spending and the proportion of hospitalizations with out-of-pocket spending exceeding $2,500 were calculated. A 1-part generalized linear model with a log link and Poisson variance function was fitted to model out-of-pocket spending as a function of patient demographic characteristics, plan type, and hospitalization characteristics. Coefficients were converted to absolute changes in out-of-pocket spending by calculating average marginal effects. RESULTS: Among 14,278 influenza hospitalizations, the mean out-of-pocket spending was $987 (SD=$799). Out-of-pocket spending exceeded $2,500 for 3.0% of hospitalizations. The factors associated with higher out-of-pocket spending included intensive care use, greater length of stay, and enrollment in a preferred provider organization plan (average marginal effect=$634, 95% CI=$631, $636) compared with enrollment in an HMO plan. CONCLUSIONS: In this analysis of elderly Medicare Advantage patients, the mean out-of-pocket spending for influenza hospitalizations was almost $1,000. Federal policymakers should consider passing legislation mandating insurers to eliminate cost sharing for COVID-19 hospitalizations. Insurers with existing cost-sharing waivers should consider extending them indefinitely, and those without such waivers should consider implementing them immediately.