These two new reports from The Commonwealth Fund find that enrollees in Medicare+Choice, the Medicare program's managed care option, paid nearly 50 percent more in out-of-pocket costs for their health care in 2001 than they did in 1999. Those in poor health had even greater cost increases. During the three-year period, Medicare+ Choice enrollees faced higher premiums and cost-sharing burdens, as well as reduced coverage of prescription drugs.
The reports, by Lori Achman and Marsha Gold of Mathematica Policy Research, Inc., point to weaknesses in the Medicare program that have a disproportionate impact on the sickest beneficiaries, who are also more likely to have low incomes.
In Out-of-Pocket Health Care Expenses for Medi- care HMO Beneficiaries: Estimates by Health Status
, 1999.2001, Achman and Gold analyzed the effect of shrinking managed care benefits on enrollees by examining trends in estimated out-of-pocket costs from 1999 to 2001. Enrollees in poor health not only paid more out-of-pocket than those in good health, they also experienced the highest rate of growth in out-of-pocket costs62 percentin the three-year period. In contrast, those in good health experienced a 43 percent increase in out-of-pocket expenses from 1999 to 2001. In 2001, enrollees in poor health spent about three times as much as those in good health ($3,578 vs. $1,195 annually).
Differences in out-of-pocket costs for those in poor health were most striking in prescription drug spending. In 2001, Medicare+Choice enrollees in poor health spent an average of $2,088 out-of-pocket for prescription drugs, a 56 percent increase from 1999. In comparison, those in good health spent an average of $158, a 47 percent increase from 1999.
Despite the increases in costs, Medicare+Choice plans are still a good value for beneficiaries compared with Medigap supplemental insurance. Previous studies of costs for beneficiaries in traditional fee-for-service Medicare have estimated average out-of-pocket costs were $3,142, considerably higher than the 2001 average estimate for Medicare+Choice beneficiaries of $1,438. However, Achman and Gold conclude that limitations in the Medicare benefit packageespecially the exclusion of drug coverage and the absence of a catastrophic limit on total out-of-pocket spendingwill mean even greater cost burdens as market forces continue to pressure health plans to increase premiums and reduce benefits.
In the second report, Medicare+Choice 1999-2001: An Analysis of Managed Care Plan With- drawals and Trends in Benefits and Premiums
, Achman and Gold analyze trends in Medicare+Choice benefits and premiums from 1999 to 2001. They found that from 2000 to 2001, average monthly premiums rose from $14.43 to $22.94, and the proportion of enrollees with prescription drug coverage fell from 78 percent to 70 percent. Rural beneficiaries have few options, higher premiums, and less-generous coverage. Many Medicare+Choice enrollees also experienced increases in copayments in 2001: one-third were charged a copayment for an outpatient visit in 2001, compared with just 13 percent in 2000.
Health plans that left the Medicare market in 2001 were also more likely to have had lower enrollments, higher premiums, and less-generous benefit packages than those that remained in the market, indicating possible competition problems. The findings support previous studies concluding that plans withdrew from markets where they had failed to attract enrollees or where they faced larger competitors.
The enactment of the Benefits Improvement and Protection Act of 2000 (BIPA) has not shored up the Medicare+Choice program. Plans that did not withdraw reduced their benefits while slightly increasing premiums and cost-sharing. BIPA has not achieve its goals of reducing the geographical disparity in benefits between low- and high-payment counties, encouraging plans to reenter the program, or rolling back reductions in benefits.
Only four plans covering about 13,000 enrollees that had dropped out of the Medicare market reentered as a result of BIPA. Most plans used the BIPA payment increase to enhance provider networks. Only 6 percent of enrollees were in managed care organizations that used the funds only to reduce premiums and/or cost-sharing.
Achman and Gold conclude that while Medicare+Choice provides affordable supplemental coverage for some beneficiaries, it is not the solution to Medicare's problems. Policymakers seeking to ensure that Medicare fulfills its man- date to provide affordable and equitable access to health care for older Americans must focus on modernizing the entire Medicare benefit package. Facts and Figures
- Average (mean) monthly premiums for Medicare+Choice increased from $14.43 in 2000 to $22.94 in 2001, while the proportion of enrollees with prescription drug coverage fell from 78 percent in 2000 to 70 percent in 2001.
- Estimates show that Medicare+Choice enrollees in poor health spend 3.8 times more out-of-pocket for medical services (other than pharmaceuticals) than enrollees in good health.
- Regardless of health status, each enrollee paid $600 annually for Medicare Part B and an average of $275 annually for the additional Medicare+Choice coverage. Together, the estimated premiums represent 73 percent of total estimated out-of- pocket costs for enrollees in good health, 47 percent of costs for those in fair health, and only 25 percent of costs for those in poor health.
- The actual average dollar increase in Medicare+Choice premiums from 1999 to 2001 was $212 per year.
- Post-BIPA, 97 percent of Medicare beneficiaries living in counties in a center metropolitan area had at least one Medicare+Choice plan to choose from, compared with 22 percent of beneficiaries in rural counties.