The Affordable Care Act incorporated financing changes for Medicare managed care, but these cost-reducing trends are not new. For years, many in Washington have worked to reduce Medicare Advantage's high cost to taxpayers until it reaches a level playing field with original Medicare.
Medicare managed care programs began years ago, when insurance companies assured the government they could run their networks for 5 percent less, per person, than what traditional Medicare was paying — and still turn a profit.
Though Advantage plans were a hit with consumers, the cost savings did not last for long. Over the years, the average Medicare Advantage payment ballooned to 114 percent of traditional Medicare's rates.
Now, with baby boomers and rising health costs threatening Medicare's solvency, the Medicare Advantage disparity has become hard to defend.
AARP will not disclose its royalties for letting UnitedHealth use its name, but a report to Congress pegged the total at $427 million in 2009. That included AARP Medicare supplement insurance, Part D drug insurance as well as Medicare Advantage plans.
Ironically, AARP has been among the loudest advocates for reform.
"Paying more for Medicare Advantage is just not acceptable,'' said AARP health policy expert Joyce Dubow. "People in both the traditional program and managed care are paying more for their Medicare premiums because of these overpayments. The system should not tilt one way or another.''
As of this year, Congress has pared Medicare Advantage's average stipend to about 103 percent of what traditional Medicare pays, shooting for parity by 2017.