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  • The Verdict Is In: Medicare Advantage Will Suffer Under Obamacare

    The outlook for seniors’ Medicare Advantage (MA) plans is grim under the new health care law. Though seniors’ premiums will drop 1 percent in the new year, this will be the exception to the rule over the next decade.

    Medicare Advantage is a popular alternative to traditional fee-for-service, allowing seniors to choose their health plan from among participating private plans. If seniors choose a plan that is less expensive than the benchmark price, they receive a rebate that can be used to add extra benefits, such as dental or vision care, or to reduce co-payments or premiums.

    The new law, however, will lower the benchmark price set for MA plans. In a recent letter, the Centers for Medicare and Medicaid Services’ (CMS) Chief Actuary Richard Foster explains that changes made by the new law “are expected to reduce MA rebates to plans and thereby result in less generous benefit packages.” For seniors who wish to keep their current plans, out-of-pocket costs will increase. Foster writes, “Prior to this legislation, the average annual MA rebate was estimated to grow from $1,093 in 2010 to $1,580 in 2019. Under the new provisions, the average MA rebate is expected to decline from its current level to $43 in 2019.”

    This is not news. Back in April, Foster warned, “The new provisions will generally reduce MA rebates to plans and thereby result in less generous benefit packages. We estimate that in 2017, when the MA provisions will be fully phased in, enrollment in MA plans will be lower by about 50 percent.”

    Recent research from Heritage’s Robert Book and James Capretta echo Foster’s findings. Their analysis shows the effects on enrollment and costs for MA enrollees by county and by congressional district.

    Book and Capretta write:

    Regardless of which outcome a particular patient experiences, every patient who would have enrolled in an MA plan under prior law will experience a loss in the value of his or her Medicare coverage. … Instead of reducing waste, the MA cuts will simply cut health care services available to patients and transfer spending from Medicare Advantage to other federal programs and other payers (including patients), thus increasing federal and state spending on Medicaid and patient spending on Part D, supplemental care plans, and out-of-pocket costs.

    The effects of such aggressive cuts to Medicare Advantage were known well before the passage of the new law. Last summer, Humana warned its 930,000 MA enrollees that under the health care overhaul, “millions of seniors and disabled individuals could lose many of the important benefits and services that make MA health plans so valuable.”

    In an unprecedented move, CMS silenced Humana’s and all other providers’ communications regarding the health care proposals before determining if they violated any law. The Government Accountability Office writes:

    Although CMS’s actions generally conformed to its policies and procedures, the September 21, 2009, memorandum instructing all MA organizations to discontinue communications on pending legislation while CMS conducted its investigation was unusual. Officials from the MA organizations and CMS regional offices that we interviewed told us they were unaware of CMS ever directing all MA organizations to immediately stop an activity before CMS had determined whether that activity violated federal laws, regulations, or MA program guidance.

    All told, seniors got a raw deal in the new health care law. Rather than reform Medicare the right way, Congress pursued a path that ignores current problems in the program and creates new ones. The best way forward for seniors and all other Americans is repeal, so that Congress can get health care right.

    Posted in Obamacare [slideshow_deploy]

    9 Responses to The Verdict Is In: Medicare Advantage Will Suffer Under Obamacare

    1. karen yancura says:

      I thought the health care law was abolishing MA. Can you enlightened me please. Tx

    2. Brook Jolley - www.lifeplanningtn.com says:

      It isn’t abolishing MA, although they cut the amount of additional reimbursement from 14% to 7%, in addition to adding a MLR ratio requirement that requires spending a certain % of dollars on care or rebates have to be given.

      I disagree that the plans will go away, however I believe that cost sharing will increase somewhat overall, and the plans that have the most success in MA will be the ones with the most restrictive network models and referral requirements.

      Basically, the HMO plans will flourish and take on larger market share, the PPO plans will decrease benefits and increase costs to basically the place in the market that was held by the PFFS plans, and in large measure the PFFS plans will cease to exist.

    3. Rosalie DeMarco, Sta says:

      My Medicare Advantage plan already had an increase of premium and co-pays with cuts in service for 2010. I just got my notice of changes for 2011. Another increase in premium cost and another cut in services. The notice also warns that doctors have dropped out of the provider network so be sure to check with your doctors if they are remaining in the plan for 2011.

    4. Pingback: Dems Offer $250 Checks to Seniors… Is That Enough as Thousands Lose Their Medicare Advantage Plans Under Obamacare

    5. Bonita Eaton,Texas says:

      Yes, my Medicare Advantage plan has already decreased it's benefits for those with Long-Term Chronic Ilnesses (Evercare/Humana). This has caused much confusion among the physicians and pharmacists, thereby preventing the plan to not pay (if it does) for much needed medical care and medications. I have had to do without my medications (as now) due to the rising costs of medications and being told that my plan or Medicare did not cover a very large percentage of the many other needs. I wish I was healthier so I still could work full time, but as we know, as we age, many of our bodies do not allow us to work as we did when we were young. I actually became disabled and lost most all my savings and home in 1999. I have no family assistance nor partner as with many of us. I praise God for His miraculous way of caring for me as He always has, in His Name, I will not complain. The facts are that some of whom I know who qualify for Medicaid receive more assistance for medical,housing, education, food, etc. than I do and are surviving much better than I. I thank God that He has given me the opportunity to help others and to work very hard most all of my life as a professional nurse but the tax and Medicare money is going mostly to those who have never worked, barely worked, or acquired citizenship to be able to get on Medicaid, Medicare, and other free government programs while we the former hard-working class are being disciplined for working hard for many years. This should not be in a truly free republic society that God has given us. Please help to restore truth and liberty to all.

    6. jun alegria says:

      This cut is for real. I went to my Dentist for my semi annual cleanup and my fee went up (from $15) to $46, a 306% increase. The lady at the register could not beleive it either because i noticed her entering it in about 3 times and so it was not an error. Now i am adamant to see my eye doctor knowing there will be another shocker.
      How come nobody informed us Seniors of this travesty (so much for "transparency"). It seems we Seniors are the "sacrificial lamb" for socialized medicine and so now i have to shell in an extra %206 to carry the burden of Obamacare. This is unfair particularly since i'ved worked all my life and NEVER EVER got a dole from our government.

    7. George Leach says:

      This senior has just decided to vote for Romney. Time to show Obama the door.

    8. slye753 says:

      Some body has to pay for the millions that donot have insurance. Guess who? Yep, seniors will suffer from this socialist president{?}.

    9. Renee Cheryl says:

      This Senior says to vote for a change for the better! I vote for Romney!!

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