1. The Value of Medicare Advantage Karen Ignagni President and CEO America’s Health Insurance Plans July 16, 2007

2. 2 Choices Before Congress Maintain Choices in All Markets versus Reducing or Eliminating Choices

3. 3 How to Evaluate Choices  Assess History  Assess Value  Consider Constituent Impact

4. 4 Medicare Advantage: An Historical Look * BBA payment methodology and rural floors-PFFS option begins (-$97B) /10 years BIPA Urban floors and higher rural floor payments $32.5B/10 years MMA $4.3B/10 years for MA Improvements $10 B/10 years for Stabilization Fund (Now $ 3.5B per TRHCA) Risk plans Medicare +Choice Medicare Advantage Part D *Chart based upon CMS Medicare Advantage Fact Sheet (3/07).

5. 5 Bipartisan Congressional Efforts to Extend Access to Choices BBA 1997 – Congress established rural “floors” (rates intentionally set above FFS) BIPA 2001 – Congress established MSA floor

6. 6 Congressional Intent Achieved MA Plans in 2003MA Plans in 2006

7. 7 Medicare Advantage Payment- 2007 Floor Counties

8. 8 Congressional Intent Achieved -- Access to benefits and savings

9. The overwhelming majority of seniors enrolled in Medicare Advantage plans are satisfied with their coverage, and satisfaction is up since 2003. 53% Very Satisfied 37% Smwht Satisfied 53% Very Satisfied 37% Smwht Satisfied 49% Very Satisfied 35% Smwht Satisfied 49% Very Satisfied 35% Smwht Satisfied Question: How satisfied are you with each of the following aspects of your Medicare coverage: Your Medicare coverage overall? Source: Ayres, McHenry & Associates (March 2007)

10. 10 Serving Vulnerable Populations MA is important choice for low-income and low-income minority beneficiaries

11. One-third of all seniors, and three-fifths of low-income seniors, would skip some health care treatments if they no longer have access to a Medicare Advantage plan. Question: If Congress makes cuts to the Medicare Advantage program and you had to use traditional Medicare coverage, would you pay higher out-of-pocket costs so you could continue to receive the same health care treatments you receive now, or would you not pay higher out-of-pocket costs and skip some of the health care treatments you receive now? Source: Ayres, McHenry & Associates (March 2007)

12. 12 MA Extra Benefits and Services -- Results

13. 13 MA and Medicare’s Financial Outlook: Long Term Costs What the Trustee’s Report Says Data MA Contribution Factors adding to growth in expenditures:  Continued growth in the volume and intensity of services per beneficiary –GAO found nearly 60% growth in spending on physician services 2000-2005 –NEJM reports beneficiaries in FFS see multiple doctors. MA can provide medical home.  The impact of recent legislative changes including Part D Part D costs lower by $113 B/10- year frame and $96 B result of competition and lower bids MA reduces Part D expenditures  Demographics-aging of population -NEJM reports uninsured age-ins have more chronic conditions. MA plans manage these diseases.

14. Three-fourths of doctors think cuts to Medicare Advantage will harm seniors. Question: If Congress makes cuts to the Medicare Advantage program, do you think that will have a negative effect on seniors enrolled in a Medicare Advantage plan, or do you think that will have no real effect on seniors enrolled in a Medicare Advantage plan? Source: Ayres, McHenry & Associates (March 2007)