Medicare Advantage premiums to decline in 2011
The Centers for Medicare & Medicaid Services (CMS) announced yesterday that the average premium for Medicare Advantage plans will be one percent lower in 2011 than in 2010.
The announcement, nearly six months to the day after passage of the Affordable Care Act, comes as a welcome feather in the cap of the president and health reform advocates who have railed at private insurers for implementing double-digit rate increases for most commercial plans.
The news also comes as some health reform legislation is set to take affect this week, including the coverage of dependents up to the age of 26 on group health plans, the elimination of lifetime or annual benefit limits on individuals, prohibitions on insurance coverage rescissions and the requirement to cover, at no cost, a host of preventive services.
Seniors in the privately administered Medicare Advanatage plans, who comprise roughly 11 million of the more than 46 million people covered by Medicare, can expect to see the same coverage as in years past, with some plans adding benefits in the prescription drug coverage gap, or "donut hole", according to CMS.
"Despite the claims of some, Medicare Advantage remains strong and a robust option for millions of seniors who choose to enroll or stay in a participating plan today and in the future," said CMS Administrator Donald Berwick, MD. "The Affordable Care Act gave us new authority to negotiate with health plans in a competitive marketplace. As a result, our beneficiaries will save money and maintain their benefits."
According to a report in the New York Times, CMS took seriously its charge to negotiate with insurance companies offering Medicare Advantage plans, and these negotiations are what led to the average premium decrease.
"We negotiated more aggressively than in the past," Jonathan D. Blum, deputy administrator of the Medicare agency told the Times. "As a result, some plans changed their bids to produce more value for beneficiaries."
According to Blum, some companies that had originally submitted bids withdrew from the process.
The announcement of reduced Medicare Advantage premiums falls in line with President Obama's repeated comments during the healthcare reform debate that the federal government was paying these plans too much money. Administration officials say that curbing the amount of money spent on Medicare Advantage plans under the new law will save upwards of $136 billion over ten years.
