Multi-Year Medicare Advantage Plans: A Framework for Action

This paper proposes a framework for action to begin to remove institutional and traditional barriers to a value-based health insurance product. In the United States, health insurance is typically a one-year contract between a plan participant and an insurer, though some employers may have multi-year contracts. There are a variety of reasons health insurance is a one-year contract, not the least of which is the difficulty of estimating costs and risks over a multi-year period and pricing the premium accordingly. However, yearly contracts can also cause distortions such as causing risk-bearers to forego costly first-year investments that may not be recouped, or devise formularies that exclude drugs and devices that are not economical for a short-term contract.

The authors of this paper, Governor Mike Leavitt, Former Utah Governor and U.S. Health and Human Services Secretary, Kerry Weems, Former Acting Administrator, Centers for Medicare and Medicaid Services, and Former Deputy Assistant Secretary for Budget, U.S. Department of Health and Human Services, and Josh Trent, Former Chief Counsel for Health, Committee on Energy and Commerce, U.S. House of Representatives, propose a Multi-Year Medicare Advantage Plan (MyMap) demonstration project to help improve health outcomes and reduce costs of care for individuals with certain conditions. Beneficiaries with high-cost chronic disease needs, or high-cost acute medical episodes, could realize substantial benefit under MyMap, as upfront investments that would be recoverable over a multi-year period could result in better care management and better outcomes for beneficiaries.