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Ride the Medicare Advantage Roller Coaster

Enrollment Goes up and Premiums Go Down In 2011

11.3 million of the 46 million Medicare beneficiaries are cheering, because President Obama announced premiums for Medicare Advantage plans will be less costly next year. Meanwhile, enrollment next year should go up 5%.

MA plans (or Part C) are run by private insurance carriers but partially paid for by the government. They are more comprehensive plans than traditional Medicare. In additional to inpatient hospital or skilled nursing facility stays, MA plans also have dental and eye care. Medicare plans don’t have these extras, and Medicare recipients either do without these services or pay full price.

This news comes as a surprise because just yesterday, it was announced that premium costs for privately purchased individual and family insurance plans have gone up in the past year, and will likely continue to rise.  The New York Times reports that “…commercial insurance premiums for many people under 65 and many small businesses are increasing 10 percent to 25 percent or more.”

More surprising is the MA Plans will offer some additional benefits to seniors, as required by the Patient Protection and Affordable Care Act. These include an end to a cap on lifetime coverage. Some ‘luxury’ benefits such as discounted gym memberships, are gone.

“Despite the claims of some, Medicare Advantage remains strong and a robust option for millions of seniors who choose to enroll or stay in a participating plan today and in the future,” Donald Berwick, head of the Centers for Medicare and Medicaid Services (CMS), said in a statement. “The Affordable Care Act gave us new authority to negotiate with health plans in a competitive marketplace. As a result, our beneficiaries will save money and maintain their benefits.”

In other words, the government strong-armed private industry to not increase the premiums or cost sharing, even though CMS reimbursements increase was well below the medical trend costs.

The health care reform law gave power to CMS to reject potentially new plans, and also gave them the ability to negotiate with insurance carriers over the benefits of their MA products.  Medicare officials said they rejected 7 plans offered by 3 companies, but most insurers re-jiggered close to 300 plans to be acceptable to the government. The most common rejected proposal included an increase to seniors’ out of pocket expenses that created a profit for the insurance carrier.

This is good for the consumers, short-term, for sure. They get more services for less money. But in the long run, will it last?

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