Some Insurers Use Increased Funding To Expand Benefits Under Medicare Advantage Plans
Companies that offer Medicare Advantage plans -- "all in one" insurance plans offered by private companies for Medicare beneficiaries and paid for by the government -- are boosting benefits and reducing premiums for enrollees because of increased government funding, the Wall Street Journal reports.
According to the Journal, the 2003 Medicare law increased government payments to Medicare Advantage plans by $46 billion over 10 years in an effort to shift enrollees into privately run plans. As a result of the funding increases, insurers including Humana, PacifiCare Health Systems, UnitedHealth Group and Aetna have increased benefits for a wide variety of plans, adding extras and lowering premiums to attract more customers. Some added benefits include the new Medicare prescription drug benefit for low or no added premiums, vision benefits, gym memberships, increased coverage for those with chronic conditions, out-of-network coverage and increased options in rural areas.
About 13% of beneficiaries currently are enrolled in Medicare Advantage plans. In 2004, 62% of Medicare beneficiaries lived in areas where such plans were offered.
Companies now are adding more Medicare Advantage policies, with 458 policies available in October 2005, compared with 300 in December 2004. The number of plans is on the rise in part because of the creation of Medicare Advantage PPOs, under which insurers are required to provide plans for entire regions of the U.S., "not just in the urban centers where it may be easier to get discounts from providers," the Journal reports.
According to the Journal, the Bush administration "view[s] private plans as a way to rein in long-term costs of Medicare," although the federal government currently spends hundreds of dollars more per Medicare Advantage beneficiary compared with beneficiaries in traditional Medicare.
However, CMS Administrator Mark McClellan said that when beneficiaries' out-of-pocket costs are included, overall spending for traditional Medicare is "significantly higher" than for Medicare Advantage plans. McClellan estimated seniors in Medicare Advantage plans can save about $100 a month on average.
Traditional Medicare beneficiaries in 2006 will pay a $110 annual deductible, 20% of the bill of each doctor visit and a $952 deductible toward hospital visits (Fuhrmans/Lueck, Wall Street Journal, 11/8).