Presentation: Health Reform and the Availability of MA Plans

---

---

A considerable portion of funding for the Patient Protection and Affordable Care Act came from changes in the funding mechanism for Medicare Advantage (MA) plans. Specifically, payments for MA plans were frozen in 2011 and in subsequent years will be based on percentages of Medicare FFS spending. Specifically, after a phase in period, benchmarks in the counties will be divided into quartiles based on Medicare FFS spending. Benchmarks in counties in the lowest spending quartile will be paid 115% of the Medicare FFS spending in their counties. Benchmarks in counties in the second and third lowest spending quartiles will be paid 107.5 and 100% of the Medicare FFS spending in their counties respectively. Finally, the benchmarks in counties in the highest spending quartile will be paid 95% of the Medicare FFS spending in their counties. Although these new benchmarks are not fully phased in until as long as 2017, insurers likely anticipate their impact. Thus the new payment system may influence plan availability immediately. This paper uses Medicare payment and plan availability data to investigate whether plan, contract and insurer availability changed in 2011 differentially in high spending vs low benchmark counties. We also investigate premium changes across different level of county FFS spending. Our analysis is segmented by plan type (because plans may respond differently and because other rules, such as the requirement that Private Fee For Service (PFFS) plans have networks may affect plan entry and exit.