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Life Health > Health Insurance > Medicare Planning

Senators Support Medicare Advantage

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Members of the Senate Finance Committee voiced bipartisan support for the Medicare Advantage program offered by insurers. They also implied that opponents of the program will have an uphill battle getting Congress to cut its appropriations.

In fact, Sen. Charles Grassley, R-Iowa, ranking member of the committee, got a critic of the program to acknowledge that if the program is cut back, urban as well as rural areas will be hurt. Grassley also won support from those testifying on the issue that reducing payments to Medicare Advantage would have a “disproportionate effect” on rural areas.

Moreover, a number of senators attending the hearing on the program questioned the national data indicating that Medicare Advantage is more costly than routine fee-for-service programs offered to Medicare recipients.

“We need regional data,” said Sen. Ron Wyden, D-Ore. “National data is masking what is going on in our state. We have to make decisions by region, and we don’t have adequate data to do that.”

Sen. Max Baucus, D-Mont., chairman of the committee, made the same point in his opening statement.

Senators of both parties from Kansas, Oregon and Washington also claimed that cutting the program would hurt Medicare beneficiaries in those areas, and that insurers providing Medicare Advantage services are working efficiently and effectively to provide broad medical and wellness services to beneficiaries.

The atmosphere in the Senate panel was far different than in a similar hearing several weeks ago before the Health Subcommittee of the House Ways and Means Committee.

There, critics of the program, led by the panel’s chairman, Rep. Pete Stark, D-Calif., wanted to curtail Medicare Advantage spending in order to avert the scheduled 10% cut in Medicare payments to physicians and to pay for an expansion of the State Children’s Health Insurance Program.

Stark, AARP, the Medicare Payment Advisory Commission and the Congressional Budget Office all contend that, on average, Medicare Advantage plans are paid 12% more than fee-for-service. This difference varies significantly by plan and by region of the country.

Some Democrats want to cut the program to save $65 billion over 5 years.

Responding to a question by Sen. Pat Roberts, R-Kan., I. Steven Udvarhelyi, M.D., senior vice president and chief medical officer of Independence Blue Cross, based in Philadelphia, said if the proposed cuts are implemented, service under Medicare Advantage “would deteriorate” and 3 million people would lose their coverage as insurers drop out of the program.

The benefits Medicare Advantage provides that fee-for-service Medicare programs don’t include wellness services that encourage seniors to stay in good health by exercising and by better managing such chronic illnesses as diabetes.

In his comments, Grassley said “it doesn’t make sense” to cut payments to Medicare Advantage.

“It would undo policies supported by members on both sides of the aisle to promote the availability of Medicare coverage choices, especially for beneficiaries in rural areas,” he added.

“Beneficiaries now have choices that can provide them with lower out-of-pocket costs and benefits not otherwise available in traditional Medicare,” Grassley noted. “Medicare Advantage plans can better coordinate beneficiaries’ health care, and that leads to better outcomes. We should be doing everything we can to offer beneficiaries better Medicare choices–not eliminating them.”

The day before the hearing, officials of America’s Health Insurance Plans said at a briefing that Medicare Advantage plans continue to play an important role for minority and low-income seniors.

“This is a vital safety net,” said Karen Ignagni, president of AHIP, of Medicare Advantage plans. Ignagni added that Medicare Advantage plans are especially important to protecting minority and lower income seniors, particularly those who fall just above qualifying for Medicaid but are not covered by an employer’s retirement plan.

Those making less than $20,000 annually, Ignagni said, are less likely to be enrolled in a private healthcare plan, and those earning more than $10,000 per year are ineligible for Medicaid assistance.

Overall, 13% of non-institutionalized Medicare beneficiaries opted to enroll in a Medicare Advantage plan in 2004, the most recent year for which data is publicly available, according to AHIP. The figure rises to 49% for those with incomes below $20,000 annually.


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