Medicare Advantage and Obamacare

Mitt Romney says 4 million seniors will lose their Medicare Advantage plan because of Obamacare.  Is this true?  It sure isn’t true in Tucson, Arizona!

The Tucson area currently has 17 Medicare Advantage (MA) plans – and this number is growing. Two new companies, Abrazo and SCAN** will be marketing their MA plans in Tucson for 2013. Health Net is introducing a new MA plan that will have a limited doctor and hospital network. CareMore is  introducing a new plan with a twist. (Sorry, I can’t write about the details here.)

According to CMS (Centers for Medicare and Medicaid Services), Medicare Advantage enrollment has grown by 28% since 2010 – when Obamacare was passed and MA payment reductions were announced. CMS projects Medicare Advantage enrollment will increase 11% over the next year.

Payment cuts to Medicare Advantage (MA) plans began in 2011 and will continue through 2019. This gradual reduction in payments is meant to allow MA companies to adapt to the changes rather than driving them out of business with one large cut. At the same time, more money will be paid to MA plans that provide high quality services to their members. Eventually, plans  receiving less than three stars on the MA rating system will be kicked out of the program (and that’s probably a good thing).

According to CMS, payment cuts have not resulted in people losing access to Medicare Advantage.  Some companies might have decided to discontinue operations in a particular county, but seniors have other MA plans they can enroll in.  CMS recently reported:

 Access to the Medicare Advantage program will remain strong, with 99.6 percent of beneficiaries having access to a plan. Additionally, the number of plan choices will increase by 7 percent in 2013. The average MA premium in 2013 is projected to increase by only $1.47 from last year, coming to $32.59. However, if beneficiaries choose lower cost plans at the same rate in 2013, as they did in 2012, the average premium is expected to increase by only 57 cents.

NOTE:  In Arizona most Medicare Advantage plans have $0 premium. One Tucson HMO MA plan has a premium, and all Arizona MA PPOs have premiums ranging from $79 to $149 per month.

I’ve written previously about Aetna, UnitedHealthcare, Cigna, and Wellpoint (the biggest insurance companies in the country) buying up companies that offer Medicare Advantage plans.  These insurance companies have spent billions of dollars to expand their Medicare Advantage business. They seem to know Medicare Advantage is here to stay.

Throughout September, Medicare Advantage plans are holding training meetings for insurance brokers, and introducing plan details for 2013.  In almost every meeting a broker has asked how Obamacare is going to affect the Medicare Advantage business, and what they should tell their clients who have heard Mitt Romney’s dire predictions.  I think I will prepare a handout to reassure brokers and their clients.  The handout will say:

Medicare Advantage enrollment has grown 28% since 2010.

Medicare Advantage enrollment is expected to grow 11% from 2012 to 2013.

Obamacare payment cuts have had no negative effect on Medicare Advantage premiums and co-pays.

Medicare Advantage is here to stay.

* *Explanation of SCAN:  SCAN is not technically a “new” plan in Tucson because they first arrived here in 2011.  However, they suspended their network building efforts in 2011 and restarted contracting doctors and hospital in 2012. They say they will aggressively market their Medicare Advantage plan this fall, so I consider them a new plan in the Tucson market.

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