Nation/World

Medicare add-ons costlier

Advantage buyers’ premiums jump

WASHINGTON – Millions of seniors who signed up for popular private health plans through Medicare are facing sharp premium increases this year – another sign that spiraling costs are a problem even for those with solid insurance.

A study released Friday by a major consulting firm found that premiums for Medicare Advantage plans offering medical and prescription drug coverage jumped 14.2 percent on average in 2010, after an increase of only 5.2 percent the previous year. Some 8.5 million elderly and disabled Americans are in the plans, which provide more comprehensive coverage than traditional Medicare, often at lower cost.

The Medicare findings are bad news for President Barack Obama and his health care overhaul that is bogged down in Congress. That’s because the higher Medicare Advantage premiums for 2010 followed a cut in government payments to the private plans last year. And the Democratic bills pending in Congress call for even more cuts, which are expected to force many seniors to drop out of what has been a rapidly growing alternative to traditional Medicare.

Republicans have seized on the Medicare Advantage cuts in their campaign to derail the health care bills, and seniors are listening. Polls show seniors are more skeptical of the legislation than the public as a whole, even though Democrats would also reinforce original Medicare by improving preventive benefits and narrowing the prescription coverage gap.

At a town hall meeting Friday outside Las Vegas, Obama said the Medicare Advantage plans are getting a “sweet deal” from the government – overpayments averaging 13 percent. “All we’ve been saying is, ‘Let’s make sure that there’s a competitive bidding process and that we are getting the absolute best bargain,’ ” the president said.

Avalere Health, a data analysis firm that produced the statistical study, found that, for consumers, Medicare Advantage is becoming less of a bargain. The monthly premium for 2010 is $39.61, representing an increase of nearly $5 from the previous year. That compares with a rise of less than $1.75 a month in 2009. The averages are adjusted based on enrollment levels in particular plans that offer medical and prescription coverage, reflecting the choices that seniors make.

“These premium increases fit within a broader trend of increased financial pressure on the insured,” said Lindsey Spindle, a vice president of Avalere. “We see very large premium increases and a continued upward creep in how much out-of-pocket expenses beneficiaries are expected to pay, such as co-payments.”

Seniors who did not shop around for lower-priced coverage during open enrollment in the fall got hit with some of the biggest increases, averaging 22 percent.

Many Medicare recipients who remain in the traditional program – about three-fourths of all seniors – are also struggling with high premiums for supplemental insurance to cover their co-payments and deductibles.

Administration officials didn’t dispute the Avalere study but sought to pin responsibility on the private insurers that participate in the program, a list that includes such industry giants as UnitedHealthcare and Aetna. Nonpartisan technical advisers to Congress say Medicare Advantage plans are being overpaid because of a flawed formula.

“The plans need to explain why these increases are necessary,” said Medicare spokesman Peter Ashkenaz.



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