Medicare Advantage Cuts: Bad news or not?

The Obama administration has proposed payment cuts for Medicare Advantage plans in 2015 and this could mean big changes for $0 premium Advantage plans in Arizona and around the country – or maybe not.

These announced payment reductions for Medicare Advantage plans have politicians and insurance industry groups warning of major disruptions for senior citizens who are enrolled in MA plans across the country.

Will there be no more $0 premium MA plans as we have in Arizona? Will co-pays for doctor visits and hospital stays go up? The worst rumors predict many Medicare Advantage plans will go out of business and millions of seniors will have to find a new plan.

So how bad is this news?

Humana seems to think things are no sot bad.  According to Yahoo Finance:

Shares of Humana surged more than 7 percent to a historic high Monday after one of the leading providers of Medicare Advantage plans said proposed health department rate cuts may be more benign than anticipated.

Changes for 2015 are not made public until October 1st,  just before the Annual Enrollment Period (AEP) when people can change their Medicare Advantage plan or Part D plan.

Will the next AEP be a crazy one or not? My prediction is “not”,  and this is because Arizona has a very competitive Medicare Advantage market with over a dozen companies competing for seniors’ business.

Medicare Advantage (MA) plan payments are based on a number of factors such as the health conditions of people enrolled in the plans. There is a base rate payment and then “risk adjustments” that keep insurance companies from losing money. Some Advantage plans have lower co-pays but also a smaller network of doctors and hospitals. Check out what I have written about HOW TO PICK A MEDICARE ADVANTAGE PLAN.

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