Medicare Advantage enrollees could take hit in 2014
proposed by an arm of the Department of Health and Human Services (HHS)
combined with PPACA’s payment cuts will result in benefit reductions and
premium increases of an average $50 to $90 per month for a typical
Medicare Advantage beneficiary next year, warned America’s Health
Insurance Plans (AHIP).
The cuts would affect 14 million seniors, or roughly 28 percent of all Medicare beneficiaries, the lobbyist group says.
The new analysis prepared for AHIP states that the combined effect of
the changes included in PPACA and the new payment cuts will result in
an estimated 6.9 percent to 7.8 percent cut to Medicare Advantage plans
in 2014, causing the net out of pocket for seniors and those with
disabilities to rise, according to AHIP.
The cuts were proposed last
week by Centers for Medicare & Medicaid Services (CMS) to take
effect next year. The analysis is by actuaries at Oliver Wyman, prepared
According to the Oliver Wyman report, “Virtually all of the 14.1
million Medicare beneficiaries are likely to be affected by these
changes, either through increased premiums, reduced benefits, or plan
exits from local markets.”
The cumulative impact of these changes will reduce Medicare Advantage
payments next year by more than eight percent, or approximately $11
billion. These cuts will result in seniors facing higher out-of-pocket
costs, reduced benefits, and fewer health care choices, AHIP stated.
“President Obama is sticking it to seniors yet again by cutting
Medicare Advantage funding,” according to Dan Weber, president of the
Association of Mature American Citizens (AMAC).
It was announced last week that the CMS
will publish new rules for Medicare Advantage programs on April
1. Subsidies will be slashed and access will be severely restricted,
according to insurance industry analysts, AMAC stated in a press release
Medicare Advantage is the part of Medicare through which private
health plans provide comprehensive medical coverage to seniors and other
Health insurance stocks reacted to the news negatively, according to a
report by the Associated Press. The costs per person for Medicare
Advantage plans are a bigger drop than many analysts who cover the
industry anticipated, the AP report stated.
Conservative bloggers and the health insurance industry are not happy, arguing the payment cuts are funding entitlement programs and leaving seniors happy with their plans strapped.
AHIP contrasted the cuts against the projections for medical cost increases of 3 percent.
“This is the lowest growth rate in the history of the Medicare
Advantage program, and it is far below the 2.8 percent increase in
payment rates for 2013,” AHIP stated.
“The proposed changes to Medicare Advantage payments are a crushing
blow to the millions of seniors and people with disabilities who count
on this critically important part of Medicare,” said Karen Ignagni, AHIP
president and CEO.
However, CMS is expecting per-capita plan medical costs to fall 3.2
percent, CMS officials said in a 199-page description of the 2014 Medicare plan bidding methods.
The new proposed payment cuts are in addition to the Medicare
Advantage cuts and the new health insurance tax included in PPACA.
AHIP says that only 4 percent of PPACA’s $200 billion in Medicare
Advantage cuts have gone into effect thus far, and the Congressional
Budget Office (CBO) projects that, when fully phased in, these cuts
alone will result in three million fewer people enrolled in the
PPACA’s new health insurance tax starts in 2014; Oliver Wyman had
previously estimated that this tax alone will result in seniors facing
$220 in higher out-of-pocket costs, reduced benefits next year and
$3,500 in additional costs over the next 10 years.
Oliver Wyman also projects that individuals with lower incomes and
those more likely to need medical services will be particularly
adversely impacted by these cuts.
The new report follows a previous analysis by
AHIP which found that low-income and minority Medicare beneficiaries
continue to rely on the high-quality health care coverage provided by
Medicare Advantage plans.
CMS stated recently that since the Affordable Care Act was passed in
2010, Medicare Advantage premiums have fallen by 10 percent and
enrollment is expected to increase by an estimated 28 percent through
this year. In addition, costs of the defined standard Part D plan will
be lower in 2014 than they are in 2013.
“The Affordable Care Act helps us strengthen Medicare Advantage and
Part D,” said Jonathan Blum, CMS acting principal deputy administrator
and director of the CMS’ Center for Medicare in a statement last week.
“We are working to ensure that people with Medicare have affordable
access to health and drug plans, while making certain that plans are
providing value to Medicare and taxpayers.”