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Moody's Seeks Medicare Advantage Details

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The latest Medicare plan enrollment figures may be just clear enough for observers to make out the shape of fruit, but not clear enough for observers to know whether they’re looking at apples or oranges, let alone to make apples-to-apples comparisons.

Steve Zaharuk and Ellen Fagin, rating analysts at Moody’s Investors Service, New York, give that assessment in a look at the Medicare plan enrollment figures released earlier this month by the Centers for Medicare and Medicaid Services (CMS).

Medicare Advantage and the Medicare Part D prescription drug plan program give private companies a chance to sell coverage to Medicare enrollees.

CMS says that enrollment in Medicare Advantage plans is up 10% from a year ago, and that enrollment in Medicare drug plans increased about 7%.

In early 2011, Medicare Advantage enrollment was up just 2.4% from early 2010, officials say.

Earlier, Congressional Budget Office analysts had predicted that cuts in the rates paid to private insurers could lead to a significant drop in Medicare Advantage plan enrollment.

The fact that Medicare Advantage enrollment is increasing rather than falling should be “credit positive” for health insurers, Zaharuk and Fagin say.

“However, it’s unclear whether insurers cut anticipated profit margins to achieve this growth, especially since CMS also indicated in its announcement that Medicare Advantage premiums have fallen an average of 7%,” the analysts say.

CMS officials have not said anything about changes in the benefits that the typical plan will provide, and the premium cuts may be due to a combination of insurers cutting benefits and accepting narrower profit margins, the analysts say.