Email
Medicare Advantage customers – including almost 90,000 in New Mexico – may not see the drastic benefit cuts or premium hikes next year that insurers have been warning about after all.
Health insurers had predicted big, painful changes for many of their Medicare Advantage customers after the federal government said in February that the amount it pays per person for the popular coverage could fall more than 2 percent in 2014.
The Centers for Medicare and Medicaid Services then changed course this week and said it now expects that the cost per person to climb more than 3 percent.
“That’s a huge positive” for the industry, said Sheryl Skolnick, an analyst who covers health insurers for CRT Capital Group.
More than 13 million people were enrolled in Medicare Advantage plans last year including 89,270 in New Mexico, or about 27 percent of the Medicare population, according to the Kaiser Family Foundation. New Mexico’s Medicare population is 330,000.
Medicare Advantage plans have become a key source of growth for insurers, which receive about $10,000 per member to provide customers with basic Medicare coverage topped with vision or dental coverage, or premiums lower than standard Medicare rates.
Insurers offer hundreds of different Medicare Advantage plans around the country, and they flood TV airwaves each fall with commercials during the annual open enrollment period for the popular plans.
Many Medicare Advantage plans will ultimately get paid less next year due to several other variables like a premium tax that is called for in the health-care overhaul, the massive federal law that aims to cover millions of uninsured people. Analysts also expect insurer profits from the plans to be strained by the growing cost of care.
But their finances won’t be squeezed so tightly that they have to chop benefits, raise rates by large amounts or leave markets entirely, as some on Wall Street initially feared.
“I think what CMS did here was to buy stability for the program,” said Dan Mendelson, president of the market analysis firm Avalere Health. “Most beneficiaries will not see dramatic changes going forward into next year.”
Journal staff contributed to this report.
— This article appeared on page B1 of the Albuquerque Journal
