Bloomberg News

Medicare Advantage Enrollment Rises 10% on Lower Premiums

June 12, 2012

Enrollment in U.S. government-backed Medicare plans run by insurers led by UnitedHealth Group Inc. (UNH:US) rose 10 percent to a record this year as lower premiums enticed people to sign up, a study shows.

The average monthly charge for the 13.1 million people on Medicare Advantage fell $4 to $35, and is down from $44 in 2010, the Kaiser Family Foundation said today in a report. The Menlo Park, California-based nonprofit also attributed membership increases to less access to supplemental coverage from former employers and more comfort with managed care than previous generations.

The 2010 health-care overhaul begins decreasing government payments to Advantage plans this year, and Medicare’s actuary has projected enrollment will be cut in half by 2017 as plans drop the market and reduce benefits. A bonus system for the plans -- estimated by the Government Accountability Office to be valued at $8 billion through 2014 -- “may have helped to mitigate the effects of the payment reductions,” Kaiser said.

“The vast majority of Medicare Advantage cuts have not gone into effect yet,” said Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, the industry’s lobbying group in Washington, in an e-mail. “As these cuts take effect in the coming years, Medicare Advantage beneficiaries will face higher out-of-pocket costs, reduced benefits, and fewer health care choices.”

Average Premiums

Medicare Advantage is an alternative to the government-run insurance program for the elderly and disabled that is administered by private insurers. The total average premium for a Medicare Advantage plan with drug coverage is $134.90 a month, $5 less than the average for traditional Medicare plus a separate plan for drug coverage, said Gretchen Jacobson, a policy analyst at Kaiser, in an e-mail.

UnitedHealth, the nation’s largest for-profit insurer by sales, leads the Medicare Advantage market with 19 percent of people enrolled in the plans, according to the report. Plans offered by local Blue Cross Blue Shield companies and by Humana Inc. (HUM:US) each have 17 percent of customers.

The GAO has recommended that Health and Human Services Secretary Kathleen Sebelius cancel the bonus system. GAO investigators said the program “dwarfs all other Medicare demonstrations” since 1995 in size, while “design shortcomings” will prevent Medicare from determining whether the bonuses help lower-quality Advantage plans improve more quickly.

Brian Cook, a spokesman for the Centers for Medicare and Medicaid Services, declined to comment on the Kaiser study.

To contact the reporter on this story: Alex Wayne in Washington at awayne3@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net


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Companies Mentioned

  • UNH
    (UnitedHealth Group Inc)
    • $87.16 USD
    • 1.13
    • 1.3%
  • HUM
    (Humana Inc)
    • $132.37 USD
    • 4.71
    • 3.56%
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