Puerto Rico Economic Pulse ©

August 2015: Deep Cuts to Medicare Advantage

On the consequences for PR’s health care system

In 2010, President Obama expanded healthcare in the US through the Affordable Care Act. Since April 2014, more than 7 million have signed up for private coverage, thereby reducing the number of uninsured in the US to its lowest level since 2008 and significantly raising payments. To reign in the expenses, Obamacare lowered Medicare spending by $716 billion from 2013 to 2022. Of this, $156 billion comes from Medicare Advantage (MA), which lets the elderly use public money to buy private health plans. Private insurers passed along the extra subsidy to consumers in the form of additional benefits or lower fees. Obamacare sought to bring private payments in line with traditional Medicare. But now, Medicare Advantage has become increasingly popular with about three in ten Medicare beneficiaries enrolled in a private plan in the US. In contrast, this proportion is about seven in ten in PR. Insurers argued that Obamacare’s cuts would force them to raise prices or cut benefits. CMS raised payments for the states but cut 11% for PR in 2016. Find out the consequences of this decision.