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Double-Digit Medicare Advantage Growth Spurt to Continue in 2013, HHS Says

By Jane Norman, CQ HealthBeat Associate Editor

September 19, 2012 -- Enrollment in Medicare Advantage programs is projected to grow by 11 percent in 2013, and premiums will rise only slightly, Health and Human Services officials (HHS) recently announced.

The growth in the Medicare private plan alternative insurance program comes despite reductions in payments to the insurers that were included in the health care law (PL 111-148, PL 111-152), showing that the program apparently remains popular. During the debate over the health care law, Republicans repeatedly warned that the cuts would doom the program and outrage seniors, so its growth is a refutation of that argument for Democrats.

Leaders of the health insurance industry in reaction to the HHS announcement warned that growth may not continue because of the size of the cuts to come. "We remain concerned that the benefits and coverage Medicare Advantage beneficiaries rely on today could be put at risk as the health care reform law's unprecedented $200 billion in cuts to the program are phased in and a new premium tax begins in 2014," Karen Ignagni, president and CEO of America's Health Insurance Plans, said in a statement. She said that given the size and scope of the cuts, beneficiaries are likely to face higher costs and coverage disruptions in years to come.

In a conference call with reporters, though, Medicare officials said they believe the program will continue to thrive because they have strengthened it and are doing a better job of negotiating good deals for beneficiaries in a competitive marketplace.

Jonathan Blum, Medicare director, said that "we are clearly overseeing this program in a much stronger way" and focusing on compliance and quality.

Blum said that so far, projections of rising premiums and program disruptions by Medicare actuaries and others have not been proven true. "We see the plans participating in the program making longstanding commitments to the program," he said. "From where we sit operating the program, experience is much different."

Reductions in insurer payments began in 2011 and "certainly plans understand the schedule of reductions," said Blum. But he said that from everything HHS analysts can see, despite more payment reductions planned for the future, there are "very strong commitments to the program" being made by insurance plans.

But Senate Republicans said that according to the Congressional Budget Office, just 4 percent of planned cuts have been made in Medicare Advantage, and Republicans slammed "misleading claims" by HHS about the health of the program.

The HHS announcement comes two days before the health subcommittee of the House Ways and Means Committee is scheduled to hold a hearing on the status of the Medicare Advantage program.

Medicare officials said premiums for Medicare Advantage have fallen by 10 percent since the 2010 law's enactment, which seems almost certainly a factor in its growth.

Officials said in an HHS statement that the average Medicare Advantage premium in 2013 is projected to increase by $1.47, compared with 2012, for a monthly total of $32.59. In comparison, the 2010 monthly premium was $36.14 a month, officials said.

If beneficiaries in Medicare Advantage shop around and enroll in less expensive plans in 2013, as many did in 2012, the average MA monthly premium would then increase by just 57 cents, officials said. Plan choices also are expected to increase by 7 percent in 2013.

Annual open enrollment for Medicare Advantage health and prescription drug plans begins Oct. 15 and ends Dec. 1.

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