The potential 2.3 percent reduction in Medicare Advantage payments proposed by an arm of the Department of Health and Human Services (HHS) combined with PPACA’s payment cuts will result in benefit reductions and premium increases of an average $50 to $90 per month for a typical Medicare Advantage beneficiary next year, warned America’s Health Insurance Plans (AHIP).
The cuts would affect 14 million seniors, or roughly 28 percent of all Medicare beneficiaries, the lobbyist group says.
The new analysis prepared for AHIP states that the combined effect of the changes included in PPACA and the new payment cuts will result in an estimated 6.9 percent to 7.8 percent cut to Medicare Advantage plans in 2014, causing the net out of pocket for seniors and those with disabilities to rise, according to AHIP.
The cuts were proposed last week by Centers for Medicare & Medicaid Services (CMS) to take effect next year. The analysis is by actuaries at Oliver Wyman, prepared for AHIP.
According to the Oliver Wyman report, “Virtually all of the 14.1 million Medicare beneficiaries are likely to be affected by these changes, either through increased premiums, reduced benefits, or plan exits from local markets.”
The cumulative impact of these changes will reduce Medicare Advantage payments next year by more than eight percent, or approximately $11 billion. These cuts will result in seniors facing higher out-of-pocket costs, reduced benefits, and fewer health care choices, AHIP stated.
“President Obama is sticking it to seniors yet again by cutting Medicare Advantage funding,” according to Dan Weber, president of the Association of Mature American Citizens (AMAC).
It was announced last week that the CMS will publish new rules for Medicare Advantage programs on April 1. Subsidies will be slashed and access will be severely restricted, according to insurance industry analysts, AMAC stated in a press release Friday.
Medicare Advantage is the part of Medicare through which private health plans provide comprehensive medical coverage to seniors and other Medicare beneficiaries.
Health insurance stocks reacted to the news negatively, according to a report by the Associated Press. The costs per person for Medicare Advantage plans are a bigger drop than many analysts who cover the industry anticipated, the AP report stated.
Conservative bloggers and the health insurance industry are not happy, arguing the payment cuts are funding entitlement programs and leaving seniors happy with their plans strapped.