Get More for Less
By: Source: AARP Bulletin Today Date Posted: 2004-12-01 16:15:00-05:00
Older Americans will have access to more of Medicare’s private managed care plans in 2005, with better benefits and lower costs. Premiums and out-of-pocket expenses are each expected to go down by about 10 percent on average, according to the Centers for Medicare & Medicaid Services (CMS).
For many beneficiaries this reverses a dismal trend in recent years of shrinking benefits, rising costs and the disappearance of managed care plans in many areas. "We’ve definitely turned the corner," says Karen Ignagni, president of America’s Health Insurance Plan, the industry’s trade group.
An infusion of federal funds—an extra $14 billion over 10 years—that Congress granted to the plans under last year’s Medicare Modernization Act made the changes possible. Since the plans received new funding last spring, Ignagni says, enrollment has increased every month, 3.7 million beneficiaries in the plans have received more benefits (such as dental and vision coverage or free fitness programs), 2 million pay less out of pocket, and 1.9 million pay lower premiums.
The Bush administration hopes to enroll a third of beneficiaries in the private managed care plans in Medicare Advantage (MA), formerly known as Medicare + Choice, by 2009, arguing that the plans will save federal money. But critics say the program will cost taxpayers more money, not less, if the plans need to be paid more than traditional Medicare to keep them in the system. A recent study by the Commonwealth Fund, which sponsors health care research, finds that Medicare in 2005 will give the plans an average of $546 more per enrollee—a total of $2.7 billion in extra payments—than it will give to the traditional program.
At their peak, in 1998, 346 plans served 17 percent of Medicare beneficiaries, but by last February they had dwindled to 145 plans serving only 11 percent, or 4.6 million people. (The exact number of plans participating in 2005 was not available at press time.)
The decline began when Congress cut payments to insurance plans at a time when health care costs were soaring. Insurers left Medicare in droves; those that remained often raised enrollees’ costs and reduced benefits. Annual out-of-pocket expenses on average rose from $976 in 1999 to $2,119 in early 2004. Now expenses average $1,942 and are projected to drop to $1,748 in 2005.
Overall, Medicare officials estimate that in 2005, 22 existing plans will expand their coverage and 35 new ones will be offered, giving another 1.6 million beneficiaries in 11 states access to the plans. About 20 percent of beneficiaries in rural areas will have access to at least one plan next year, compared with 16 percent now.
Even so, because insurers still gravitate to highly populated areas that get the highest payments from Medicare, five rural states—Alaska, Maine, Mississippi, Vermont and Wyoming—will not have any MA plan in 2005.
Wide differences occur within states, too. Just one of New Hampshire’s 10 counties will have an MA plan, while each of Iowa’s 99 counties offer at least three plans, at least one of which carries no premium.
Beneficiaries will find that a higher number of plans with zero premiums—typically offered in large urban areas—will be available in 2005. On the other hand, they will also find that many insurers are adding extra premium charges. Prescription drugs and vision or dental services, when offered, are usually included in a plan’s basic package. But a new Aetna plan in Pennsylvania, for example, will charge a $50 monthly premium for optional drug coverage, plus $99 for the plan’s regular premium and $78.20 for Medicare’s Part B premium—a total of $227.20 a month.
Selecting a plan may be hard in areas offering several choices, such as the Bronx in New York with 32 plans, Florida’s Miami-Dade area with 26 and Los Angeles with 21. Consumer advocates advise beneficiaries to consider carefully not just a plan’s premiums but its benefits, deductibles and copayments as well. A nonprofit plan in parts of Oregon, for example, has a steep monthly premium of $210 but offers attractive benefits: drug and hearing coverage, only $200 per hospital stay and a $1,000 annual limit on out-of-pocket spending within its network of health providers.
Some plans may charge 20 percent for a particular service while others have a $30 copay. Or one plan may have lower hospital costs but meager drug coverage, while a second plan has the reverse.
How enrollment in an expanded Medicare Advantage program plays out in 2005 will be closely watched, since it is viewed as a trial run for the new drug benefit that kicks in on Jan. 1, 2006—a benefit that could be run by the same plans.
preview