Premiums for Medicare Private Plans Dip 1 Percent

September 21, 2010 - 10:00 AM
The new health care law cuts payments to the private insurance companies that operate the 'advantage' plans

Washington (AP) - Seniors enrolled in popular private health insurance plans through Medicare will pay a little less on average next year, the Obama administration said Tuesday.

The average monthly premium in so-called Medicare Advantage plans will dip to about $35, a roughly 50-cent or 1 percent cut, Medicare officials said.

About 11 million seniors -- one-fourth of beneficiaries -- are signed up in the plans, and Medicare projects enrollment to increase by 5 percent in 2011.

The fate of the plans has been a source of concern because the new health care law cuts payments to the private insurance companies that operate them. However, payment rates are frozen for 2011 and significant reductions are still a couple of years away.

Administration officials say the program is strong, and they expect it to stay that way in the future.

"The plans know in advance what the law says for the future, and despite that they remain very strongly committed to the program," said Jonathan Blum, head of the Medicare division that oversees the plans. "We believe that the program will be stronger and provide better value."

Nonetheless, averages are just that. Some seniors will see higher premiums, while others will see a drop. Because of that advocates encourage Medicare beneficiaries to shop around each year during open enrollment season, which starts Nov. 15.

With changes looming some plans have decided they'll no longer participate in the program. Of the seniors whose plans are being discontinued, all but 2,300 have a choice of another Medicare Advantage plan in their area. Beneficiaries can also opt for traditional Medicare, but they will likely have to buy supplemental insurance to cover deductibles and cost sharing.

Separately some 300,000 seniors will have to switch prescription drug coverage as a result of administrative changes to winnow down duplicative plans. Private analysts had projected a much larger number, about 3 million.

Blum said the administration negotiated with 300 Medicare Advantage plans to push back proposed increases in premiums and cost sharing that were deemed too high.

"We worked with those plans to bring them into more affordable ranges," he said.

Additionally, the new health care law provides seniors with cost-free preventive care starting next year. It will be available to all beneficiaries, whether they pick a private insurance plan or opt to stay in traditional Medicare.