July 1, 2000
Marsha Gold, Amanda Cassidy, Mathematica Policy Research, Inc.
Medicare+Choice in 2000: Will Enrollees Spend More and Receive Less?, Amanda Cassidy and Marsha Gold, Mathematica Policy Research, Inc., The Commonwealth Fund, July 2000
A new study on Medicare managed care has found that fewer managed care organizations in 2000 are offering health plans without premiums. At the same time, enrolled beneficiaries are paying higher copayments for prescription drugs.
In Medicare+Choice in 2000: Will Enrollees Spend More and Receive Less?, Amanda Cassidy and Marsha Gold of Mathematica Policy Research provide a detailed look at changes in benefits offered to elderly Medicare beneficiaries enrolled in Medicare+Choice, Medicare's managed care option, during the period 1999-2000. The study, which was supported by The Commonwealth Fund, draws from a number of data sources, including Medicare Compare, the Health Care Financing Administration's consumer-oriented summary of information on Medicare+Choice plans.
Cassidy and Gold find that in 2000, a third fewer managed care organizations (MCOs) are offering a ""zero premium"" product as their basic Medicare+Choice plan. In the current year, 42 percent of basic plans have no premium, compared with 62 percent in 1999. Copayments for physician and hospital services, meanwhile, are higher than last year.
Prescription drugs-a major reason Medicare beneficiaries are attracted to managed care plans-are still covered in most packages. But there was a small decline in the share of basic contracts covering this benefit-from 73 percent to 68 percent-and there is evidence of either less-generous benefits or increased required cost-sharing. The same downward trend is found with regard to generosity of benefits and growth in cost-sharing in all benefit packages offered each year.
Medicare+Choice enrollment in 2000 still provides a vehicle for many beneficiaries to obtain broader coverage at low cost. In many areas of the country, however, beneficiaries will have to pay more for this coverage and will most likely receive fewer additional benefits. Benefit reductions since 1999 reflect the managed care industry's response to changes in payment rules made in the Balanced Budget Act of 1997. They also reflect increased difficulty in negotiating competitive rates from providers.
The analysis indicates that the generosity of Medicare+Choice plan benefits may continue to decline in the future, especially if capitation rate increases continue to be small. Moreover, it shows that the generosity of benefits varies substantially across the country, particularly between urban and rural areas. Policymakers interested in encouraging more equitable and complete access to comprehensive benefits, the authors suggest, would be well advised to consider alternatives for reforming Medicare benefits and reducing the geographic disparity in options available to beneficiaries. Facts and Figures
- After experiencing both withdrawals and changes in benefits, more than 125,000 fewer beneficiaries were enrolled in Medicare+Choice plans as of March 2000 than as of December 1999.
- In 2000, 68 percent of Medicare beneficiaries live in counties that have a managed care option, compared with 72 percent in 1999.
- Compared with 1999, nearly double the percentage of enrollees in 2000 are in plans whose basic package offers less than $500 in prescription drug coverage.