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Medicare Advantage Premiums Down, Enrollment Up

By Dena Bunis, CQ HealthBeat Managing Editor

February 1, 2012 -- Medicare Advantage premiums have fallen 7 percent on average and enrollment in these managed care plans has gone up about 10 percent over the past year, Health and Human Services Secretary (HHS) Kathleen Sebelius announced last week.

This is the second time in two months that HHS officials have trumpeted the decrease in premiums and increase enrollment for these plans.

The enrollment numbers confirm projections from last September that enrollment in Medicare Advantage plans would continue to rise and average premiums would continue to fall, HHS officials said in a statement. Average monthly premiums have gone from $33.97 in 2011, to $31.54 in 2012, while enrollment has risen from 11.7 million in 2011 to 12.8 million in 2012, they said.

"For more than 12 million Medicare beneficiaries who rely on Medicare Advantage, the program is stronger than ever with improved benefits and lower costs,'' Sebelius told reporters on a conference call. "Even as beneficiaries see their premiums fall, they continue to have robust choices no matter where they live." She said 99.7 percent of beneficiaries have access to a Medicare Advantage plan if they want one.

The health care law (PL 111-148, PL 111-152) reduces payments to Medicare Advantage plans over time. That has led the Congressional Budget Office and industry analysts to project that Medicare Advantage enrollment will drop.

So far that hasn't happened. But, a March, 2011 CBO analysis projected that enrollment would peak 2012 and then start a rapid decline, leading to an enrollment of 7.8 million by 2019.

Asked about that during a conference call with reporters, Jonathan Blum, the Center for Medicare an Medicaid Services' director of Medicare, said that the agency continues to see more plans wanting to enter the Medicare Advantage market.

"The schedule of future payment changes are well laid out,'' Blum said. "It's a very competitive marketplace. Blum added that "we're confident that the program will continue to grow over the next several years."

A March Government Accountability Office report in December did find that the number of Medicare Advantage plans available to seniors was falling.

Blum's response to that report was that the number of plans available has declined because his agency has whittled out duplicative plans. The number of insurers offering Medicare Advantage plans has not decreased, he said.

HHS officials cited other evidence that the program remains strong:

  • Regardless of the total number of plans available, HHS officials said there are 26 Medicare Advantage plans to choose from in nearly every county across the country.
  • Since the 2010 law was enacted, Medicare Advantage premiums have fallen by 16 percent and enrollment has climbed by 17 percent.

"Not only are average premiums lower, but plans are better, with more beneficiaries enrolled in 4 and 5 star plans," Center for Medicare an Medicaid Services Acting Administrator Marilyn Tavenner said in a statement.

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