The Medicare Advantage Program in 2014. III. The Impact of the Affordable Care Act on the Medicare Advantage Program


Prior to the enactment of the Affordable Care Act, concerns were raised about how the transition of MA plan payments to the FFS-based rates provided for in the Affordable Care Act would affect plan participation, enrollment, premiums and benefits. With the enactment, some predicted that the reduction in higher MA payments would cause a significant number of MA plans to withdraw from the market, leading to reductions in plan availability, enrollment and benefits, and increased costs to beneficiaries.20 Other experts predicted that the changes under the Affordable Care Act would strengthen the MA program by encouraging MA plans to compete based on price and quality, and achieve greater efficiencies for taxpayers and beneficiaries.21 The recent data displayed below support the latter arguments, as early trends suggest that since the Affordable Care Act, costs have decreased and quality has improved, while enrollment continues to grow. The scheduled quality bonus payments (QBPs) were increased by a demonstration project effective from 2012-2014 that offset some of the payment reductions during this period.22

20 James C. Capretta, “Obamacare and Medicare Advantage Cuts: Undermining Seniors’ Coverage Options,” The Heritage Foundation, January 20, 2011, accessed at

21 For example, the Commonwealth Fund anticipated that the Affordable Care Act’s “new incentives should make participation in Medicare attractive for plans that provide well-coordinated, responsive care for beneficiaries.” Brian Biles, Giselle Casillas, Grace Arnold, and Stuart Guterman, “The Impact of Health Reform on the Medicare Advantage Program: Realigning Payment with Performance,” Commonwealth Fund, October 2012, accessed at

22 Beginning in 2012, the Centers for Medicare & Medicaid Services’ Medicare Advantage Quality Bonus Payment Demonstration extends quality bonus payments to 3 and 3.5 star plans, and eliminates the cap on blended county benchmarks that would otherwise limit quality bonus payments. The demonstration ends in 2014.

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