According to a report last month from the U.S. Department of Health and Human Services, Medicare Advantage premiums will decrease by an average of 4 percent in 2012 and plans expect enrollment to increase by as much as 10 percent. This comes on the heels of an earlier announcement showing that the average Part D prescription plan premiums would remain virtually unchanged in 2012.
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“Thanks to the Affordable Care Act, Medicare is stronger than ever,” said HHS Kathleen Sebelius in an announcement. “On average, Medicare Advantage premiums will go down next year and seniors will enjoy more free benefits and cheaper prescription drugs.”
But this is not how many expected things to go for Medicare Advantage, the health plans for seniors run by private insurance companies. According to America’s Health Insurance Plans, the Affordable Care Act was supposed to result in a dramatic drop in enrollment and much higher premiums for MA plans.
Robert Zirkelbach, spokesman for AHIP told Kaiser Health News that the trade group stands by its prediction that the law will adversely affect MA plans. "As these cuts take effect in the coming years, Medicare Advantage beneficiaries will face higher out-of-pocket costs, reduced benefit and fewer healthcare choices," he said.
It wasn’t a hard prediction to make. During health reform debate, Medicare Advantage plans came under scrutiny because they cost more money per member to administer than regular Medicare. As a result, the law targeted cutting at least $136 billion from MA.
But so far, the opposite has happened, rates are down and enrollment is up.
With a second consecutive premium decrease on the way, administration officials were quick to trumpet them as a result of health reform and direct rebuff to those who predicted higher premiums.
"Instead we are seeing just the opposite," said Sebelius in a press conference. "Medicare plans are stronger than ever and beneficiaries continue to have access to affordable options."
It sounds good on the face of it, but a little quick digging shows the decreased premiums have likely been the result of the stubbornly stalled U.S. economy. Similar to private plan members, MA members have been seeking fewer medical services during the economic downturn. That means costs to insurers are down and, with them, MA premiums. A similar trend has affected Part D prescription program.
So while one side will trumpet the success of health reform in keeping premiums in check (and may have a point), others will still warn of impending doom (and may have a point).
Reality, though, should suggest this: With such a sweeping change and transformation of the healthcare system underway, trying to discern now, less than two years after enactment, what the real affects are, is very premature.
Perhaps then we should all adopt the approach of Bill Belichick, the curmudgeonly head football coach of the New England Patriots, who speculates little and takes everything at face value. So when it comes to the news that Medicare Advantage premiums will be down in 2012, let’s take a page from Belichick’s book and say, “It is what it is.”