Medicare Advantage: Enrollment Up–For Now

By  //  June 14, 2012

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The Business of Healthcare

(Video by StaySmartStayHealthy)

BREVARD COUNTY–The Medicare Advantage (MA) plan program is an alternative to traditional Medicare, which offers care to seniors through private insurers that contract with the Centers for Medicare and Medicaid Services (CMS).  13 million Medicare beneficiaries, which comprises 27% of the Medicare population, were enrolled in a MA plan in 2012.  According to a recently released report from the Kaiser Family Foundation (KFF), that level of MA enrollment represents a 10% increase from 2011 enrollment, a substantial boost in growth despite the fact that the average number of MA plans available to enrollees has declined from a high of 48 in 2009 to 22 in 2012.

Lower Premiums Catalyst For Higher Enrollment

The KFF study suggests that lower premiums drove the increase in enrollment, with the average monthly charge for MA beneficiaries falling $4 from 2011 rates to $35, which is significantly down from the $44 average premium in 2010. The report also attributed membership increases to less access to supplemental coverage from former employers and more comfort with managed care than previous generations.

Significant MA Cuts On the Horizon

However, this may be the calm before the storm for MA plans. The Patient Protection and Affordable Care Act (PPACA) passed in 2010 contains cuts to MA that were strongly opposed by Republicans and insurance companies, and which, if the PPACA survives Supreme Court scrutiny, would total more than $136 billion over 10 years.   The cuts start to kick in this year, and Medicare’s actuary has projected that enrollment will be cut in half by 2017 as plans reduce benefits and/or raise premiums and lose market.

As MA cuts take effect in the coming years, beneficiaries will face higher out-of-pocket costs, reduced benefits, and fewer health care choices. (Shutterstock Image)

Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, the industry’s lobbying group in Washington, said in an email to Bloomberg Business Week, “The vast majority of Medicare Advantage cuts have not gone into effect yet.  As these cuts take effect in the coming years, Medicare Advantage beneficiaries will face higher out-of-pocket costs, reduced benefits, and fewer health care choices.”

MA Bonus System Under Fire

The KFF report points out that a bonus system for the MA plans based on quality and service and valued at $8 billion over the next two years, “may have helped to mitigate the effects of the payment reductions.”

Senator Orrin Hatch, a Utah Republican, said the GAO report suggests that the administration abused its authority, pumping money into MA bonus plans to avoid more criticism over the impending MA cuts.

However, that bonus system has come under fire from federal investigators at the nonpartisan Government Accountability Office (GAO) as being wasteful, and there are some in Congress who have criticized the program as a wasteful political ploy by the administration to appease MA beneficiaries in the face of the impending cuts in the program.

MA plans are presently a very popular, affordable and cost effective alternative to traditional Medicare coverage for the approximately 40,000 Brevardians who are currently enrolled in over 15 different MA plans.  Whether or not the MA plans will maintain their value for seniors, if and when the PPACA provisions take effect, remains to be seen.