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Government wants to cut Medicare Advantage payments by 3.55%

  • The Centers for Medicare & Medicaid Services has proposed cutting 2015 base payment rates for the Medicare Advantage program for senior citizens by 3.55%.
  • The proposal is subject to negotiations, with a final decision due in April.
  • "The final cut may be bigger, as the proposed rate doesn't take into account adjustments required by the Affordable Care Act," says Bloomberg Industries analyst Michael Manns.
  • Last year, the government increased 2014 base payments by 3.3% after initially proposing a 2.2% fall, although actual payments are falling 6.7% due to a new Obamacare tax and sequestration.
  • Health insurers: AET, HNT, HUM, UNH, WLP, MOH.
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Comments (10)
  • Anyone making investment decisions based on this article, make sure you understand what is actually going on with the public Part C Medicare Advantage heath plan before you take the plunge.

     

    This article above says:

     

    "The Centers for Medicare & Medicaid Services has proposed cutting 2015 base payment rates for the Medicare Advantage program for senior citizens by 3.55%." The negative 3.55% refers only to a change in the National Per Capita Growth Percentage and not to the overall effect -- positive or negative -- on the defined contribution per enrollee that public Part C Medicare Advantage health plans will receive. Many other factors play into that defined contribution.

     

    The article above says:

     

    "The proposal is subject to negotiations, with a final decision due in April." There are no explicit negotiations at this time (who know what happens in back rooms among all the Congresspeople of both parties who oppose these cuts and the bureaucrats and the lobbyists). The announcement from Friday 2/21 kicks off a month long comment period after which a final framework and bidding structure will be announced for 2015 plans. Negotiations -- to the extent you call it a negotiation when the CMS tells the insurers what to do -- happens after the bids come in and before the plans and prices are announced in September.

     

    The article above says:

     

    "The final cut may be bigger, as the proposed rate doesn't take into account adjustments required by the Affordable Care Act..." According to page 5 of the 148-page CMS announcement of 2/21. the negative 3.55% IS the effect of PPACA. But like I said, it don't matter anyways. There are a lot of moving parts in this process and this is only one (the suggested changes to Part D prescription drug plans are much more serious).

     

    The article above says:

     

    "Last year, the government increased 2014 base payments by 3.3% after initially proposing a 2.2% fall, although actual payments are falling 6.7% due to a new Obamacare tax and sequestration." So if all other things were equal (they are not per the points above), the subsidies might be cut by 10% or more per capita in 2014.

     

    If you are going to invest in an insurance company because of likely changes to the public Part C Medicare Advantage health plan program, remember the following:

     

    1. About 30% of retired Medicare beneficiaries choose Part C as a supplement to their Original Medicare "policy." 60% choose a privately purchased private Medigap supplement or get a supplement from a former employer. 20% are on Medicaid, a few percent depend on the VA or similar program, and only a percent of (apparently very rich or very stupid) retired Medicare beneficiaries do nothing. ["Retired" is a key adjective in the previous paragraph. Not all Medicare beneficiaries are retired. The percentages add up to more than 100% because some retirees have more than one type of policy.]

     

    2. The same insurance companies sell both types of policies (and many of them also make money running the Original Medicare program for the government). The insurers make money no matter what happens.

     

    3. As long as public Part C Medicare Advantage health plans include annual out of pocket spending limits and Original Medicare and most private Medigap plans do not (which is the current situation), Part C will probably continue to be a better deal for the retired person who really wants true insurance.
    23 Feb, 11:30 AM Reply Like
  • All that being said, the government will eventually force most health insurance companies out of business. Choose carefully.
    23 Feb, 03:26 PM Reply Like
  • As I had figured, UnitedHealth and Humana both announced Monday Feb 24 that the "cuts" (which aren't really cuts as explained above) were not as bad as the two insurance companies had originally projected. UNH and HUM said that was because of something in the fine print of the 150 page document (that I didn't see) about getting more money from relatively healthier baby boomers coming onto Medicare in 2015 in even greater numbers (the people born in 1949 plus the people born 1946 to 1948 who deferred Medicare because they kept working until their SS kicked in full). I think they probably mean that the pool is just actuarially getting less costly (but that will only last a few years).

     

    And as I said Sunday: "The same insurance companies sell both types of policies (and many of them also make money running the Original Medicare program for the government). The insurers make money no matter what happens."
    25 Feb, 08:12 AM Reply Like
  • "The insurers make money no matter what happens."

     

    Some go out of business eventually.
    26 Feb, 12:59 AM Reply Like
  • Look, there is only one outcome that is worth talking about, the FULL REPEAL of OBAMACARE!
    Anything short of the full takeover of the senate by the true conservative republicans(boycott Karl Rove and his mouthpieces,not a penny for Karl) this November will cause more Americans to loose their lives!
    People are dying because of OBAMACARE!
    This progressive nightmare needs to be staked along with the Congressional Progressive Caucus!
    C.P.C.? Are you for real? Hey Keith Ellison, we will not comply with your progressive caucus and its socialist dystopian dreams!
    23 Feb, 02:33 PM Reply Like
  • Yeah, we could go back to the dystopian dream we were living in.
    23 Feb, 08:07 PM Reply Like
  • Hender - Is that comment sarcasm? If not, I would like to point out that there are more people without insurance now than there were last October 1 when Obamacare went live.
    24 Feb, 12:25 AM Reply Like
  • I started an advantage plan in 2013. My total expenses were less than $300. For 2014, that plan was canceled. Could that be the Medicare version of "If you like your plan you can keep your plan"?

     

    This year I will pay over $2000 for my treatments.
    24 Feb, 09:16 AM Reply Like
  • Part C plans get cancelled every year and new ones start up so your problems are not necessarily President Obama's fault. The big changes in Part C in 2014 that I have seen so far because of the Patient Protection and Affordable Care Act is reduced benefits, not higher premiums (e.g., raising the annual OOP limit, raising co-pays). You can expect more of that in 2015 plus higher premiums and more of the restricted networks that are getting some publicity in Connecticut. They way PPACA affected you (more than $150 a month) seems quite rare.
    25 Feb, 08:18 AM Reply Like
  • The claim was that the ACA would lower costs.
    26 Feb, 01:01 AM Reply Like
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