MEDICARE HMOs: Premiums to Spike Next Year, Says HCFA

      Medicare HMO beneficiaries will be forced to pay far higher premiums next year, particularly for prescription drugs and physician office visits, HCFA disclosed yesterday. Though the rate hikes themselves don't come as a surprise, "the size and the scope of the increases were unanticipated," reports the Los Angeles Times, which speculates that the changes will foment a new round of debate over Medicare reform and elder care. PacifiCare Health Systems' Secure Horizons, the nation's largest Medicare HMO, offers a representative example of what's ahead for retirees: The plan will raise $10 prescription co-pays to $15, require a $5 co-pay for office visits that are now free of charge and restrict drug coverage -- currently unlimited -- to $2,000 per year. PacifiCare spokeswoman Alexandra Warnier yesterday argued that HMOs are simply passing on the costs of providing coverage in a high-tech medical environment, noting that "Medicare HMOs are getting an increase of 2.5% from Washington, while general medical inflation is climbing at the rate of 6.5% a year, and drug costs are rising by 10% to 20% annually." But the federal government says its payment rates are generous (Rosenblatt, 9/16). Senior citizens and their advocates, unsurprisingly, expressed concern over the increases. "It is just getting worse and worse and worse. These increases are shockers," said Kate Stahl of the St. Paul-based Minnesota Senior Federation.

Across the NationThe increases will reverberate nationwide. Some examples:

• Minnesota: With roughly 50,000 seniors covered by managed care, the three Medicare HMOs have proposed monthly premium increases ranging from $270 to $299, a 12% to 50% increase over this year's rates (Howatt, Minneapolis Star Tribune, 9/16).
• Connecticut: More than 100,000 covered seniors in the state will see price increases of $500 to $1,000 per year and for many plans, a lower cap on drug coverage. For example, Aetna U.S. Healthcare is increasing the monthly premium for its Medicare 10 plan from $19 to $81, and decreasing its maximum drug cap on brand-name drugs from $750 per year to $500 a year. Experts are concerned the changes could push seniors back into traditional Medicare (Julien, Hartford Courant, 9/16).
• Florida: Four of five plans in South Florida will increase rates and cut benefits, affecting the 40% of seniors across the region who are enrolled in Medicare managed care. For example, members of the AvMed Health Plan in Broward County will have to pay for their medications for the first time ever -- a charge ranging from $10 for generics to $40 for off-list drugs -- while Foundation Health's Palm Beach County HMO will no longer cover medicines at all (Chandler, Miami Herald, 9/16).

More to Come
      Yesterday's HCFA disclosure corresponded with a separate study made public yesterday by the National Academy of Social Insurance, which warned that "an ever-growing share of the nation's resources will be devoted to health care costs." The study predicted that Medicare's share of the nation's GDP will jump from its current 2.5% to 5.1% by the year 2030, when the entire baby boom will be older than 65 (Los Angeles Times, 9/16).