Impact of Medicare Advantage Cuts on Seniors Sharply Disputed
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 unnecessarily.
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 insurance exchanges.
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 its network.
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 business.
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.
This article originally appeared at Kaiser Health News, where Phil Galewitz is a staff writer. It was produced by Kaiser Health News with support from The SCAN Foundation. Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization not affiliated with Kaiser Permanente.