California Healthline Daily Edition

Summaries of health policy coverage from major news organizations

Officials: Enrollment in Medicare Advantage To Rise, Premiums To Fall

Medicare Advantage enrollment is expected to increase by 10% in 2012, monthly premiums are expected to decline by an average of 4% and benefits likely will remain stable, Obama administration officials announced on Thursday, the Washington Post reports.

In addition, the officials said premiums for MA plans -- which now cover about one-quarter of all beneficiaries -- declined by 7% on average in 2011. The average beneficiary enrolled in an MA plan paid about $39 monthly for premiums in 2011, according to an analysis by the Kaiser Family Foundation.

CMS Deputy Administrator Jonathan Blum attributed the drop in premiums to CMS' strong negotiations with health plans and to companies' desire to stay in the market (Galewitz, Washington Post, 9/15).

According to The Hill's "Healthwatch," the data refutes concerns that the federal health reform law would negatively affect MA plans and drive up premiums.

HHS Secretary Kathleen Sebelius said, "Many people raised fears that under the [federal health reform law], beneficiaries would see their Medicare Advantage options shrink and their premiums rise," adding, "Instead, we have seen just the opposite" (Pecquet, "Healthwatch," The Hill, 9/15).

Republicans Say Data Is Skewed by MA Bonus Payment Program

Many Republicans say the growth in enrollment was because of a "politically motivated pilot program" that awards bonuses to plans based on care quality, National Journal reports (McCarthy, National Journal, 9/15).

The Obama administration in November 2010 expanded bonus payments to MA insurers who score three out of five "stars" on a quality rating scale. Previously, MA insurers were required to receive four stars to receive the extra payments. The change -- which is expected to cost $1.3 billion over three years -- will mean 62% of MA insurers will qualify for a bonus. Under the original plan, just 14% would have qualified.

Critics of the change note the new bonus program will reward even plans described on the Medicare website as being poor performers over a period of three years (California Healthline, 11/18/10).

Further, industry officials said reductions to MA plan payments in the health reform law ultimately will offset the recent trend.

America's Health Insurance Plans spokesperson Robert Zirkelbach said that "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" ("Healthwatch," The Hill, 9/15).

This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.