Seniors with Medicare Advantage plans that offer medical and prescription drug coverage face sharp premium increases this year.
According to a new study from consulting firm Avalere Health, current enrollees in Medicare Advantage Prescription Drug Plans (MA-PDs) will pay, on average, $39.61 per month in 2010, an increase of 14.2 percent compared to 2009. In contrast, the average monthly MA-PD premium increased by only 5.2 percent from 2008 to 2009.
"The Medicare findings are bad news for President Barack Obama and his health care overhaul that is bogged down in Congress," writes Ricardo Alonso-Zaldivar for the Associated Press. "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."
Premium increases vary significantly by plan type, with the largest jumps seen in private fee-for-service (PFFS) plans, according to Avalere. More than half of all MA-PD enrollees are in health maintenance organizations (HMOs) which had slightly lower premium increases than MA-PD plans overall (11.3 percent), though their premiums still jumped substantially from 2009 to 2010 compared to the 2008 to 2009 increase of only 0.9 percent.
As a result of policies in place when 2010 MA rates were set, most plans' payments were cut by 3 to 5 percent for 2010.
According to Avalere's analysis, there are 2,430 MA-PD plans in 2010, of which 1,705 were also available in 2009. If a beneficiary had remained in the same plan between 2009 and 2010, their premium would have increased on average 22 percent. The HMO and local PPO increases were each 22 percent, while the PFFS increase was on average 26 percent, the SNP increase was on average 29 percent, and the regional PPO increase was on average 76 percent.
Doing the same analysis for last plan year, there were 2,748 MA-PD plans in 2009, of which 2,277 were also available in 2008. If a beneficiary had remained in the same plans between 2008 and 2009, their premium would have increased on average 10 percent. HMO and SNP premiums were both up an average of 5 percent, local PPOs were up an average 3 percent, regional PPOs were down 5 percent, and PFFS premiums increased 38 percent.
"Premiums are going up - not just in the individual markets - but also for Medicare Advantage products," said Lindsey Spindle, a vice president at Avalere Health, in a released statement. "They fit into a broader trend of increased financial pressure on the insured through rising co-pays and increased premiums."
| MA-PD plans only | ||||||
| Average Premiums (enrollment weighted) | Premium Growth (%) | |||||
| 2008 | 2009 | 2010 | 2009 | 2010 | ||
| All Plans | $32.98 | $34.69 | $39.61 | All Plans | 5.2 | 14.2 |
| HMO | 30.91 | 31.18 | 34.70 | HMO | 0.9 | 11.3 |
| Local PPO | 69.08 | 65.16 | 67.56 | Local PPO | -5.7 | 3.7 |
| Regional PPO | 37.12 | 29.56 | 31.07 | Regional PPO | -20.4 | 5.1 |
| PFFS | 30.81 | 44.09 | 57.85 | PFFS | 43.1 | 31.2 |
| SNP | 18.00 | 16.37 | 18.37 | SNP | -9.0 | 12.2 |
| Other | 113.20 | 116.63 | 116.17 | Other | 3.0 | -0.4 |
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