We all heard during the elections how President Obama and Presidential hopeful Mitt Romney argued about the Medicare Advantage cuts from the Affordable Care Act. Mitt Romney sited that there was over 700 billion in MA cuts, while President Obama argued that this was absurd. Well the truth came out this week when Medicare Advantage cuts appeared larger than anticipated.
Medicare Advantage Cuts
The last week of February, the Centers for Medicare and Medicaid Services announced a further cut of 2.3% in Medicare Advantage Payments in 2014. This sent the Medicare Advantage Plans into an uproar stating that they were already getting close to a 5% cuts to their plan and adding this 2.3% would put them right at 7% cut.
The insurance companies were not the only ones who noticed these cuts. Companies that are publicly traded and offered MA Plans all took a hit. Some companies like Humana and United Healthcare took large hits (roughly 8%).
What do these Medicare Advantage cuts mean?
To a consumer these Medicare Advantage cuts mean either a loss of benefits, higher premiums or both. AHIP recently released a statement that members will probably get some unpleasant surprises in 2014 plan year. Some of the possible changes could be premium increases from $50-$90 per month or cut in benefits.
If premiums increase and benefit are cut we are expecting Medicare Supplement plans to increase enrollments. These plans supplement Original Medicare and pick up the deductibles, coinsurance, and co-pays that accompany covered Medicare services. Medicare Supplements normally have higher premiums than Medicare Advantage Plans, but they do provide much more extensive coverage.
These Medigap plans also do not limit providers available, but MA plans do limit their members to specific networks which is the major issue with people who have enrolled in a MA Plan. Basically these MA cuts will stir up some change in the Medicare market towards the end of 2013 (Annual Election Period) so people have a chance to change prior to the 2014 plan year.