Curmudgeon's Corner

Medicare Advantage Targeted

Posted by Al Campbell on Feb. 21, 2013

U.S., Wisconsin, Political, Healthcare, Quality of Life

Medicare Advantage, used by more than 32% of the seniors in Wisconsin, got hit with a proposed cut set up by the passage of PPACA (a/k/a ObamaCare).  This cut has been known to be included in PPACA but had been postponed until now, after the elections interestingly enough since the senior vote is a significant block of votes.

Medicare Advantage is the program in which private health insurers are paid by Medicare to provide the Medicare coverage to seniors who enroll in their program.  These plans typically included additional benefits so as to attract enrollees even as they save money for the government.  They encompass both the health and pharmacy benefit for enrollees.  United Health and Humana are two of the largest companies in this field.  Health insurers took a hit in the stock market as a result of this news.

According to a Forbes article, the changes in rates proposed to be paid by Medicare (Centers for Medicare and Medicaid [CMS]) to participating health insurers will drop by an overall 7% to 8% in 2014.  The typical for-profit managed care plan, again according to Forbes, targets profit margins of about 5%, while not-for-profits target even smaller margins.  “If implemented, these rates and the program changes CMS is suggesting would be enormously disruptive to Medicare Advantage, likely forcing a number of smaller plans out of the business and creating disarray for many seniors.”

These rate cuts, as mentioned above, were supposed to have been issued before the recent elections but CMS postponed issuance.  There is speculation that outcries might serve to again force postponement.  The final rates are to be issued by April 1^st.   

This proposed rate cut does not take into account the “doc fix” that Congress faces by late this year.  If that is not postponed again, or if it is not otherwise fixed by Congress, physicians would take a hit of some 25% or more to the rates they are now paid by Medicare.  This could further disrupt the marketplace with significant physician network changes in addition to a reduction in the number of options available to those in these programs.

PPACA includes many things about which there is little or no awareness other than ‘inside the beltway’.  The significance of this situation serves as an indicator of the kinds of changes that will be faced as PPACA comes into full bloom.

There is a school of thought that sees PPACA as the tool that was designed to bring our country to a true “single payer” health care system.  Announcements of this kind do nothing to make that theory seem implausible; frankly that thought becomes more plausible.

Nearly one in every three Wisconsin citizens/residents will be impacted if this isn’t either changed or postponed once again.  I’m not holding my breath waiting for that to occur.