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Medicare Advantage premiums flat, enrollment to increase by 11 percent

Health and Human Services Secretary Kathleen Sebelius announced Tuesday that Medicare Advantage (MA) plans are projected to increase enrollment by 11 percent in 2013 and that average premium prices will remain unchanged. The news follows last month’s announcement that Medicare Part D prescription drug plan premiums would also hold steady.

“Thanks to the Affordable Care Act, the Medicare Advantage and Prescription Drug programs have been strengthened and continue to improve for beneficiaries,” said Sebelius in a press release. “Since the law was enacted in 2010, average premiums have gone down, enrollment has gone up and new benefits and lower drug costs continue to help millions of seniors and people with disabilities.”

According to information supplied by HHS, since the ACA was enacted in 2010, MA premiums have decreased an average of 10 percent and enrollment in these plans has increased 28 percent.

If the projected increase in Medicare Advantage plans does occur, it would mean that 14.5 million people would receive their main Medicare benefits through a private MA plan, up from 13.1 million 2012.

While the administration was touting the successes of the program over the past two years, the insurance industry’s main lobbying and trade group America’s Health Insurance Plans (AHIP) was sounding a more cautious note.

“We remain concerned that the benefits and coverage Medicare Advantage beneficiaries rely on today could be put at risk as the healthcare reform law’s unprecedented $200 billion in cuts to the program are phased in and a new premium tax begins in 2014,” said Karen Ignagni, president and CEO of AHIP in a statement. “As the payment cuts and new taxes take effect, Medicare health plans will continue to do everything they can to preserve benefits and keep coverage as affordable as possible for the millions of seniors and people with disabilities they serve. However, given the size and scope of these cuts, Medicare beneficiaries are likely to face higher costs and coverage disruptions in the coming years.”

While AHIP continues to warn that total out of pocket costs for MA members will increase significantly in the next ten years as a result of ACA, and the administration touts health reform as the major reason MA premiums have remained low and enrollment is up, some would say there is another factor at play: the sluggish economy.

With utilization of healthcare services down as people delay healthcare treatment, the result has been a dampening effect on the rise in private health insurance premiums.

“Medical costs have gone up a little, but not a lot,” said Dan Mendelson, president of health market analyst firm Avalere Health, in a Washington Post report. “You don’t see the kind of (service) utilization increases that you saw in past years. That creates an environment where the federal government can give a modest rate increase, and the plans say, ‘Thank you.’”

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