Medicare Advantage cuts according to AHIP
October 2009: America’s Health Insurance Plans released the following statement at the end of September, 2009 regarding the impact of proposed cuts to Medicare Advantage:
FACT: The impact of proposed cuts to Medicare Advantage (MA) would vary greatly depending on how the cuts are structured and where a senior happens to live.
The House legislation would have the greatest impact in rural areas and areas with historically low fee-for-service (FFS) expenditures. Some of the areas could experience funding reductions of more than 20 percent.
The Senate Finance Committee’s proposal would have the greatest impact in very different areas. According to the Congressional Budget Office’s (CBO) analysis of an option very similar to the Committee’s proposal, MA enrollees in areas where plans bid below FFS – which CBO describes as “correlated but not identical to” urban areas – would experience over a 60% reduction in the value of additional benefits compared to what they receive today in their MA plans. This compares to about a 25 percent reduction in rural areas.1
FACT: Previous cuts to Medicare Advantage resulted in millions of seniors losing their coverage or experiencing benefit reductions.
According to CMS, enrollment in Medicare Advantage (then known as Medicare+Choice) experienced multi-year declines following enactment of the Balanced Budget Act of 1997. Between December 2001 and December 2002, Medicare Advantage enrollment declined by more than 900,000.
From 1999 to 2003, nearly 2.4 million Medicare beneficiaries were impacted by plan withdrawals and service reductions. 3
Footnotes:
1 Analysis of CBO Letter to the Honorable Michael Crapo, 5/18/2009.
2 CMS Medicare Managed Care Geographic Service Area Reports
3 CMS Medicare Managed Care Geographic Service Area Reports
