Consequences of Medicare Advantage for Beneficiaries and Politics: Revisiting The Delegated Welfare State

The Delegated Welfare State (Morgan and Campbell 2011) explored the causes and possible consequences of the 2003 Medicare reform boosting private managed care plans in the delivery of Medicare benefits. In this paper, we review scholarship on beneficiary experience (access, costs, outcomes) and political feedbacks arising from the delegated governance reform to evaluate whether predictions about consumer behavior and policy entrenchment have manifested. We find that beneficiary experiences and satisfaction do not differ significantly between Medicare Advantage and traditional Medicare, and MA plans’ managed care techniques have cut per beneficiary spending. However, MA remains costlier to the federal government, per beneficiary, because of the outsized payments received by plan providers. Officials have failed to rectify these overpayments because of policy feedback effects – the empowerment of lobbying groups with a stake in the program and beneficiary support for it. Growing dependence on private plans to deliver health insurance for a large and politically influential constituency, senior citizens, has rendered government officials and elected politicians reluctant to imperil this market and the happiness of beneficiaries.