Medicare Advantage premiums to dip an average of 1%
■ CMS expects that enrollment in the plans will grow by 5% in 2011, but critics say the health reform law eventually will harm beneficiaries.
By Chris Silva — Posted Oct. 4, 2010
Washington -- The average premium individuals pay for private Medicare Advantage plans is slated to drop slightly next year, even as the new health system reform law mandates that insurers add more benefits to plans.
The Centers for Medicare & Medicaid Services announced Sept. 21 that on average, Medicare Advantage premiums will be 1% lower in 2011 than they were in 2010. In addition, beneficiaries enrolled in prescription drug plans should find little or no change in their benefits next year and should see more drug plans offering options to help avoid the coverage gap, or "doughnut hole."
At the same time, CMS expects that enrollment in Medicare Advantage plans will grow by 5% in 2011. And, consistent with conditions of the new health system reform law, beneficiaries in most Medicare Advantage plans and traditional Medicare will gain access to preventive benefits with no out-of-pocket-costs, CMS said.
"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," said CMS Administrator Donald Berwick, MD. "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."
CMS said 99.7% of beneficiaries who have access to a Medicare Advantage plan today will have access to a plan in 2011. The agency estimates that about 5% of nonemployer beneficiaries in Medicare Advantage and stand-alone prescription drug plans will need to choose a new health plan or traditional Medicare in 2011.
All but 2,300 enrollees in private plans that no longer participate in Medicare will have a choice of enrolling in a different plan. CMS will continue to work with beneficiary advocates and State Health Insurance Assistance Programs to make sure seniors know the best alternative coverage options available.
America's Health Insurance Plans, which represent the interest of insurance companies, credited the work of health plans for the dip in premiums and rise in enrollment for Medicare Advantage.
The health reform law freezes 2011 benchmark rates at 2010 levels, meaning Medicare Advantage plans will not receive rate hikes to account for increases in costs, AHIP said. Despite the freeze, plans are adding benefits called for under the new law, such as free wellness visits in 2011, some free health screenings and a 50% discount on brand-name drugs for seniors who fall in the coverage gap.
"Medicare health plans continue to demonstrate their strong and long-term commitment to this program," said Karen Ignani, AHIP's president and CEO. "Nevertheless, as deep cuts go into effect in the coming years, government experts have forecasted that millions of seniors will experience higher costs, reduced benefits and fewer choices."
AHIP points to a report released Sept. 14 by the Heritage Foundation, a conservative think tank based in Washington, D.C., as evidence that the health reform law eventually will harm beneficiaries in Medicare Advantage plans.
According to the Heritage report, Medicare Advantage cuts scheduled to be phased in between 2012 and 2017 substantially would restrict the ability of beneficiaries to choose the health plans that best meet their needs. The report cited CMS' Office of the Actuary when it stated that by 2017, 14.8 million senior citizens and disabled Americans who would have had Medicare Advantage benefits under conditions before the health reform law will be denied coverage for many services and incur higher out-of-pocket costs.
"Reform is working"
Other organizations hailed CMS' Medicare Advantage findings for 2011 as a positive development.
"Next year looks bright for Medicare consumers," said Joe Baker, president of the Medicare Rights Center, a consumer advocacy nonprofit based in New York City.
"CMS has rigorously reviewed plan bids and used new authority ... to help keep plan premiums down even as new consumer protections are put in place," he said.
Democratic lawmakers responded favorably to CMS' report, while Republicans were skeptical.
"We can now begin to align payments between traditional Medicare and Medicare Advantage without an increase in premiums or diminishing access," said Rep. John D. Dingell (D, Mich.)."The CMS findings leave no doubt, health reform is working -- costs are going down, more people are covered, and they're getting improved benefits."
But Sen. Charles Grassley (R, Iowa), dismissed the CMS claims that health system reform is improving Medicare Advantage. "The Administration's own chief actuary predicts that the $200 billion in cuts from health reform will decrease Medicare Advantage's projected enrollment by 50% between now and 2017," he said. "The administration may be trying to persuade seniors that everything is fine, but the millions of Medicare beneficiaries who will lose their current coverage or see fewer benefits in the coming years will disagree."