Thursday, September 24, 2009

Medicare Advantage is a private health insurance program designed to compete with the government-run Medicare program. Both insure people age 65 and older and some younger, disabled people.

Under Medicare Advantage, the government contracts with private insurers, which offer policies that cover doctor visits, hospitalization and sometimes prescription medications. Medicare Advantage plans must offer at least the same benefits as traditional Medicare, but many providers include more in a bid to attract customers.

Such plans were introduced in the 1970s in an effort to cut Medicare costs. However, as the government sought to add coverage in underserved -- often rural -- areas, costs soared. According to the independent Medicare Payment Advisory Commission, Medicare Advantage now costs the government 14 percent more per beneficiary than traditional Medicare.

This year, 23 percent of all Medicare beneficiaries are enrolled in a Medicare Advantage plan.

-- Madonna Lebling

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