Feb. 24, 2014 - Seniors enrolled in
Aetna’s Medicare Advantage plan In Baltimore County, Md., saw their
monthly premiums rise from $33 to $51 this year. Enrollees in HealthNow
New York, a Medicare HMO in upstate Erie County, saw their premiums jump
from zero to $28 a month. Those in UnitedHealthcare’s plan in Cuyahoga
County, Ohio, pay $15 more to see a specialist this year, bringing their
total co-pay to $45.
The health insurance industry
points to these examples as some of the more extreme cases of
beneficiaries feeling the sting of federal funding cuts to Medicare
Advantage plans that cover nearly 16 million senior citizens. They say
the Obama administration’s additional proposed 1.9 percent in cuts to
the plans for 2015, which was announced Friday, will mean millions more
will see reductions in benefits and higher out-of-pocket costs.
But health policy experts and
advocates for seniors say most Medicare health plans have largely kept
costs and benefits stable and believe the industry is scaring seniors
Is The Sky Falling?
“We have really overall had a
rather calm year so the ‘sky is falling’ predictions from the health
insurance industry did not come true,” said Joe Baker, president of the
Medicare Rights Center, a consumer advocacy group.
The announcement of the
government’s proposed reimbursements for the private Medicare plans,
which now cover a third of all Medicare beneficiaries, has become an
annual battle since the passage of the Affordable Care Act, which
gradually reduces subsidies paid to Medicare Advantage plans to bring
them into line with the cost of traditional Medicare.
Last year, for instance, the
administration initially proposed cuts of 2.2 percent for 2014. After a
campaign by insurers that included paid advertising and letters from
scores of lawmakers, the government reversed course and increased the
rate 3.3 percent.
Health plans say those stated rates
are misleading, however, because they don’t tell the full story. They
argue that when other factors are taken into account, such as Medicare
cuts made as a result of budget sequestration and the health law’s tax
on health insurance premiums and reduction in subsidies, Medicare
Advantage plans actually saw more than a 6 percent cut this year. And,
they say there will be even higher cuts next year if the
administration’s proposed rate is adopted.
‘‘Another round of payment cuts
would be devastating to ... seniors and people with disabilities that
have chosen to enroll in Medicare Advantage for the better benefits and
higher quality coverage these plans provide,” said Karen Ignagni, CEO of
the trade group, America’s Health Insurance Plans.
Despite similar predictions last
year, enrollment is still rising overall in the private plans—up nearly
9 percent this year.
And in many parts of the country,
such as South Florida and New York, seniors can still choose health
plans with no monthly premiums.
A growing number of Medicare
beneficiaries have chosen to enroll in Advantage plans, often to reduce
their out-of-pocket spending as traditional Medicare generally covers
only 80 percent of the cost of most doctor and outpatient care. In
addition, the plans often offer extra benefits, such as hearing aids or
gym memberships, which are not available in traditional Medicare.
The flip side is that beneficiaries
must seek care from physicians, hospitals and other providers that
contract with those plans to be in their networks. Traditional
fee-for-service allows beneficiaries to visit any doctor or provider
that accepts Medicare.
Over the next few years, the health
law will continue to reduce payments to Medicare Advantage plans until
they are in line with the cost of traditional Medicare. Independent
advisors to Congress have said that seniors in traditional Medicare are
subsidizing the higher costs of those in private plans.
These payment cuts are also helping
to fund expanding coverage to millions of uninsured Americans, under the
Affordable Care Act. The savings are part of the way to balance the
books, to help pay for subsidies to people buying plans on the health
David Lipschutz, policy attorney
with the Center for Medicare Advocacy, said Medicare costs have been
rising at their lowest levels in decades and Medicare Advantage plans
“should not be insulated from those forces.”
Health plans make business
decisions each year on prices and benefits and this year is no
different, he said. “The health insurance industry is trying to use a
lot of confusion on this payment issue, but we are unaware of any new
trends in changes in benefits,” Lipschutz said.
Len Pursiano, who counsels seniors
in Bergen County, N.J., for the State Health Insurance Assistance
Program, a consumer help program, said seniors were upset this year when
two area health plans eliminated their zero-premium plans and required
them to pay more than $145 per month. A third insurer, UnitedHealthcare,
maintained its zero premium plan, but reduced the number of doctors in
In fact, UnitedHealthcare, the
largest Medicare Advantage insurer in the country with more than 3
million members, dramatically reduced number of doctors in its plans in
10 states this year, many of them in the Northeast.
You Better Shop Around
Consumer advocates say Medicare
Advantage works only if seniors shop for a new plan each year because
the plans change so often. But too often, seniors stay with same plan
which leads them to pay more than they need to.
Bill Daniels, coordinator of
insurance at the Erie County Department of Senior Services, said the
costs and benefits change each year, though most seniors choose the
plans with zero premiums.
Of insurers’ predictions that
things will worsen next year, he said: “Seniors can still choose from
zero premium plans and new plans are entering the market.”
Health plans don’t disclose how
much money they make from marketing Medicare Advantage plans. Overall,
United Healthcare made a $10 billion profit last year on $122 billion in
revenues. Company officials say Medicare is only one part of its
Still, Kim Reyes, who counsels
seniors in Greenville, S.C. for the State Health Insurance Assistance
Program says seniors are hyper-vigilant about any changes in their costs
or benefits. “Some folks count every penny,” she said.
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