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Life Health > Health Insurance > Medicare Planning

Medicare Moves Toward Election Season Clash With Insurers

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Health insurers could slash their Medicare Advantage plan menus this fall, while the 2024 general elections are in progress.

Officials in the administration of President Joe Biden set the stage for a conflict Monday by locking in a 3.7% average increase in federal payments per Medicare Advantage plan enrollee for 2025.

The Centers for Medicare and Medicaid Services, the agency that oversees the Medicare Advantage program, put that number in a final version of the 2025 Medicare Advantage rate announcement.

The 3.7% increase is unchanged from the figure included in an advance notice posted in February. It’s bigger than the 3.32% increase provided for 2024. But America’s Health Insurance Plans says average spending per member was more than 7% higher in 2023 than in 2022.

The 3.7% increase “did not fully account for rising health care costs and a sharp increase in seniors’ use of care,” according to Mary Beth Donahue, president of the Better Medicare Alliance, a group for Medicare Advantage program supporters.

What it means: In some years, Medicare plan issuers persuade CMS officials to sweeten the terms described in the final Medicare Advantage rate announcement.

If that fails to happen this year, some insurers may not change their plan menus. Others could narrow Medicare Advantage plan menus or leave the program entirely.

The backdrop: The Medicare Advantage program gives private insurers a chance to use federal payments and enrollee premiums to provide what looks like an alternative to “Original Medicare” coverage.

Program plans serve 34 million of the 66 million Medicare enrollees.

The rate announcement:  The components of the final 3.7% expected federal payment change include a 2.33 percentage-point increase related to rising health care costs and a 3.86 percentage-point increase related to deterioration in enrollees’ health.

The total change also includes a 2.45 percentage-point cut designed to compensate for what CMS believes to be efforts by insurers to make the enrollees look sicker than they really are in order to increase risk-related payments.

The election problem: Medicare enrollees can sign up for Medicare Advantage plans during an annual enrollment period that runs from Oct. 15 through Dec. 7.

Any dramatic changes in Medicare plan menus could become an election issue, because early general election voting will already be underway in 13 states when the annual enrollment period starts, and the Nov. 5 general election date will fall in the middle of the Medicare annual enrollment period.

Credit: CMS


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