The impact of the affordable care Act (ACA) on favorable risk selection and Beneficiaries’ health status in Medicare advantage: a preliminary assessment

In response to increasing fiscal pressures, the Affordable Care Act (ACA) sought to reduce Medicare Advantage plan expenses by restructuring the bidding and payment processes. The purpose of this study is to assess the effects of the ACA’s payment freeze and restructuring of the bidding and payment processes on favorable risk selection in Medicare Advantage plan enrollment (objective 1) and changes in the health status of beneficiaries enrolled in Medicare Advantage plans over time (objective 2).

We used the Medicare Health Outcome Survey baseline data (2007→2013) for analyses of the first objective (7 cohorts, 1.7 million beneficiaries) and the linked baseline and follow-up data (2007–2009→2011–2013) for analyses of the second objective (5 cohorts, 0.5 million beneficiaries). To examine favorable risk selection we used the following outcomes: self-rated health, falls, balance problems, falls management, frailty, and morbidity. To examine changes in beneficiary health status over time, we examined changes (over time) in these same outcomes. The focal independent variable is the policy implementation measure, which is time dependent and measures the accumulation of changes to Medicare Advantage payment policies resulting from the ACA. Multiple regression models were developed to examine the relationship between ACA implementation and outcomes of interest.

In terms of favorable selection, individuals enrolled in Medicare Advantage plans post-ACA have, on average, better self-rated health (b = 0.003, p < 0.01), lower odds of falls (AOR = 0.981, p < 0.001), higher odds of falls management (AOR = 1.040, p < 0.001), lower frailty risks (IRR = 0.983, p < 0.001), and lower risks of comorbidities (IRR = 0.989, p < 0.001). In terms of health status changes over time, the results indicate that in the post-ACA period, beneficiaries reported better self-rated health (b = 0.028, p < 0.001), lower odds of falls (AOR = 0.965, p < 0.001), lower odds of balance problems (AOR = 0.958, p < 0.001), lower odds of falls management (AOR = 0.981, p < 0.05), lower frailty risks (IRR = 0.944, p < 0.001), and lower risks of comorbidity (IRR = 0.986, p < 0.001) at follow up compared to the same risks at baseline.

These findings suggest that as the Medicare Advantage payment policies in the ACA were being implemented, plans may have engaged in favorable selection activities, yet beneficiaries exhibited more favorable health outcomes.