Medicare Advantage provision going smoothly so far

The Senate passed a landmark health-care bill by a vote of 60-39 on Thursday, Dec. 24, 2009 that would expand health-care coverage to more Americans and begin an overhaul of Medicare and the private insurance market.
By Amy Goldstein
Washington Post Staff Writer
Monday, November 29, 2010; 10:31 PM

One of the most significant savings envisioned in the new health- care law - limiting payments to the private health plans that cover 11 million older Americans under Medicare - is, so far, bringing little of the turbulence that the insurance industry and many Republicans predicted.

The law, which sets in motion the broadest changes to the U.S. health-care system in decades, will hold down the amount of money the government gives to Medicare Advantage plans, which are available to patients who prefer a managed-care version of the program. The savings is forecast to amount to $145 billion by the end of the decade.

Whether the payment changes are warranted was a contentious subplot in the protracted debate over the legislation. Democrats argued successfully that the private plans were being overpaid and could withstand the changes. Republicans warned that such plans would raise prices, lower benefits or cause defections from the program, stranding the elderly people who rely on them.

Early clues to the actual effects have now materialized, as elderly Americans may sign up for a health plan for 2011 during an enrollment period through the end of the year, and the warnings of swift, serious damage to the program are not borne out. Fewer health plans are available for the coming year, but the decrease is largely for reasons unrelated to the new law. Premiums have not jumped substantially, and benefits have not tended to erode.

Plans drop out

According to federal figures, the number of plans that accept Medicare recipients has fallen by about 13 percent from 2010, or slightly more than 500 plans.

A closer look shows that about half those plans left Medicare because of changes in federal rules that predate the sprawling overhaul law passed by Congress in March, according to the figures from the Department of Health and Human Services' Centers for Medicare and Medicaid Services (CMS). And many of the others left as a result of deliberate efforts by the CMS to merge or eliminate small, neighboring health plans with similar benefits.

Medicare is the federal program that, since the mid-1960s, has given health insurance to Americans 65 and older. For most of its history, Medicare has offered beneficiaries a choice between traditional fee-for-service insurance in which patients can visit any doctor or other caregiver they want, and a private, managed-care version, whose name and details have evolved over time.

Nearly a fourth of the participants are in Medicare Advantage, as the private part is known under a 2003 law. Enacted when Republicans controlled Congress and the White House, the law began three years later to give health plans more money as an incentive to offer extra benefits and, in turn, attract more Medicare patients.

Private plans come and go from the program every year; about 920,000 beneficiaries must choose a new insurer for next year because the one they had is no longer available to them, compared with about 670,000 whose coverage was disrupted a year ago. Even after some plans left for 2011, people on Medicare still have, on average, a choice of two dozen plans in their community, according to the Kaiser Family Foundation, a nonpartisan health policy and research organization. And according to the CMS, only 2,300 Medicare recipients nationwide, all of them in rural Colorado and Utah, lost access to a private health plan and do not have a another one nearby.

Insurers' premiums for Medicare customers are, on average, rising by a smaller amount for 2011 than for this year and in 2009, according to Kaiser. And widespread reductions in medical benefits have not occurred, federal health officials said.

"What we are seeing is a very strong commitment to the program" by health plans, said Jonathan Blum, director of the CMS's Center for Medicare. Blum said that insurance executives with whom he has met have told him they expect to enroll more Medicare patients for the coming year - despite recent predictions by the Congressional Budget Office that enrollment would dip.

Outside the Obama administration, many fear that the smooth experience will not continue for long. "It may be a little early," said David Certner, legislative director for AARP, the influential lobby for Americans 50 and older, which sells coverage to its eligible members under Medicare Advantage. "A lot of these changes . . . don't kick in until next time around. We'll see what the impact is."

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