Trends in Premiums, Cost-Sharing, and Benefits in Medicare+Choice Health Plans, 1999–2001

Though only 16 percent of Medicare beneficiaries were enrolled in managed care plans in 2000, these plans continue to be attractive for several reasons. Foremost, such plans (termed Medicare+Choice plans) provide a much more affordable source of supplemental coverage than is available through such offerings as Medigap, which covers many costs that Medicare alone does not (Nelson et al. 1997; Schoen et al. 1998).

Managed care plans finance their supplemental coverage through savings they achieve in providing basic Medicare benefits or by charging premiums. Throughout the mid- to late 1990s, plans offered increasingly generous benefits to attract more enrollees. A sharp reversal of this trend occurred in 2000, however, when coverage became somewhat less comprehensive and many plans began either charging premiums or increasing premiums (Cassidy and Gold 2000). In that same year, enrollment in Medicare+Choice plans decreased for the first time.