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Press Release


Aug 11, 2003

Medicare+Choice Enrollees Face Continued Cost Increases in 2003; Average Costs Have Doubled in Four Years

Medicare PPO Out-of-Pocket Costs Are Even Higher

New York City, August 11, 2003—Providing evidence of eroding benefits in the Medicare+Choice managed care program, a new Commonwealth Fund report finds that enrollees' average annual plan premiums and other out-of-pocket costs rose 10 percent in 2003 to $1,964, more than double what they were in 1999. The report, Average Out-of-Pocket Health Care Costs for Medicare+Choice Enrollees Increase Ten Percent in 2003, also reveals that out-of-pocket spending for enrollees in Medicare PPO (preferred provider organization) demonstration plans is nearly 50 percent higher, on average, than costs for Medicare+Choice enrollees. Average out-of-pocket spending by PPO enrollees is also higher than that experienced by the average beneficiary in traditional Medicare—raising questions about whether these plans can offer a lower-priced alternative for Medicare beneficiaries, according to authors Marsha Gold and Lori Achman of Mathematica Policy Research, Inc. Gold and Achman estimate that enrollees in PPO demonstration plans, which were implemented by the Centers for Medicare and Medicaid Services in 2003 to give Medicare+Choice enrollees more plan options, will spend $2,884 out-of-pocket in 2003. That is substantially higher than the $1,964 in average annual costs for those in Medicare+Choice plans. These cost estimates are potentially understated because they assume that all care is received through in-network providers, according to the report. Costs for enrollees in Medicare+Choice have continued to trend upward since 1999, the first year Gold and Achman analyzed beneficiary spending in the Medicare+Choice program. In 2003, enrollees will pay an average of $1,964 in out-of-pocket expenses for health care—twice as high as in 1999, when costs averaged $976. “As Congress debates the role of private plans in the future of the Medicare program, it should consider the eroding financial protection experienced under Medicare+Choice,” said Gold. Sicker Medicare+Choice enrollees face even higher cost burdens. Those in poor health will spend about three times more out-of-pocket than those in good health. Costs for sicker plan enrollees also increased at a faster rate over the four-year period than did costs for healthy enrollees. From 1999 to 2003, average out-of-pocket costs for beneficiaries in poor health climbed from $2,211 to $5,305. Annual costs for those in good health rose from $836 to $1,564. “Health insurance is designed to protect individuals from high health care costs that could inflict financial hardship,” said Karen Davis, president of The Commonwealth Fund. “The steadily increasing financial burden on sicker beneficiaries is of notable concern.”

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Aug 11, 2003