From this time last year, enrollment in Medicare Advantage rose 10 percent and premiums have fallen 7 percent, the Department of Health and Human Services announced today:

Enrollment has risen to 12.8 million in 2012, while average premiums have fallen 7.2% to $31.54, confirming loose projections from September that enrollment in Medicare Advantage plans would continue to rise and average premiums would keep falling.

Medicare beneficiaries are given the option to receive their Medicare benefits through private health insurance plans. Insurers have been focused on increasing their businesses for Medicare-based plans to tap the aging pool of baby boomers, and as high unemployment levels make expanding the mature market for employer-based insurance a tougher prospect.

In general, the Medicare Advantage program, which allows seniors to choose coverage from among private health care plans, proves that private insurance providers are able to do what the government is not — maintain patient satisfaction, lower costs and improve quality of care. According to recent research, Medicare Advantage Health Maintenance Organization plans vastly outperform traditional Medicare fee-for-service plans. Compared with traditional Medicare FFS, MA HMOs show a 20 percent reduction in hospital days, an 11 percent reduction in admissions, a 24 percent reduction in emergency room visits, a 39 percent reduction in readmissions and a 10 percent decrease in potentially avoidable admissions. Heritage Foundation health policy analyst Kate Nix summarizes:

  • MA also performed better than FFS when assessed using discharge data on hospital utilization.
  • MA plans may be doing a better job of preventing unnecessary inpatient care by increasing use of outpatient services and office visits.
  • MA plans may be avoiding unnecessary readmissions through superior discharge planning and coordination of care following an inpatient episode of care.

The moral of the story? No wonder enrollment in Medicare Advantage continues to go up. Unfortunately, Obamacare makes deep cuts to Medicare Advantage — and, thanks to those cuts, Medicare’s Chief Actuary estimates that MA enrollment will be at just 7.4 million in 2017 — whereas enrollment would have reached 14.8 million under prior law. In other words, PPACA’s MA cuts will cause a reduction of 50 percent in MA enrollment. The cuts to MA are just one more piece of evidence in the case against Obamacare.

Plus, let’s not forget that Medicare is the most costly and least efficient federal entitlement program and vastly in need of reform. In my ideal world, such a federal program wouldn’t exist at all, but, as it does and as it’s highly unlikely to be abolished, we need to at least look at our reform options. Rep. Paul Ryan has a plan on the table and other politicians and organizations have proposed solutions, too. Entitlement reform needs to be treated as an immediate and urgent priority — as, indeed, entitlements are the main driver of our national debt and the root of an important political problem, too. As lawmakers take up the topic of how best to reform Medicare, they’d do well to remember the lesson Medicare Advantage has to teach: Private competition drives down costs.