Has Medicare Been Privatized?

By Jeanne Lambrew, Karen Davenport | February 8, 2006

President Bush called the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA) “a landmark achievement in American health care.”  This legislation created Medicare Part D, a new outpatient prescription drug program, which truly is a significant development.  However, this law may have set in motion an even more profound change in Medicare’s structure.  The MMA redesigned the payments and rules for private health plans, which are an alternative to traditional Medicare, and renamed this program “Medicare Advantage”.  These changes, the nature of the drug benefit, and their effects on coverage that supplements Medicare could result in a large shift in enrollment to Medicare Advantage plans.  In other words, it is possible that many, if not most, Medicare beneficiaries could be enrolled in private plans within the decade.  This issue brief explains why this may occur and raises questions about its implications on costs, satisfaction, and access to care.

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