By Kerry Young, CQ Roll Call
September 21, 2015 -- Premiums for insurer-run Medicare Advantage plans will be stable next year, and thus may attract more customers to an approach to managing health services for the elderly and disabled that can cost taxpayers more than the traditional Medicare program.
The average monthly premium for Medicare Advantage plans will drop by 31 cents to $32.60 next year from $32.91 for this year, the Centers for Medicare and Medicaid Services (CMS) said Monday. More than half—about 59 percent—of participants in the plans will not see any increase in their premiums. The flat premiums show that people on Medicare are "benefiting from a transparent and competitive marketplace," said Sean Cavanaugh, CMS deputy administrator, in a statement.
Many plans offer dental, vision and hearing benefits that traditional Medicare does not provide, and some insurer-run plans don't charge a monthly premium at all.
By next year, almost a third of Medicare's population, or 17.4 million people, may be enrolled in Advantage plans, CMS said. Participation in Advantage plans is booming. Enrollment rose by about 9 percent in 2014, to almost 16 million, according to the Medicare Payment Advisory Commission (MedPAC).
The growth has proven something of a surprise, as the 2010 health law included measures intended to bring payments for Medicare Advantage plans closer to the cost of caring for people in traditional Medicare. That could have made the plans less enticing for insurers, as the profits were predicted to shrink in the Medicare Advantage industry, which cost taxpayers about $159 billion last year.
Companies may be using risk scores, measures meant to reflect the health of the insured population, to blunt the other reductions, according to the most recent report from the trustees of the Medicare program.
Separately, MedPAC has estimated that Medicare will spend about $8 billion more this year for people enrolled in Advantage plans than they would have if these people remained in the traditional program.
But customers in the plans also benefited from an estimated $3 billion in efficiencies delivered by plans, MedPAC said in its March report to Congress. Medicare Advantage giant Humana Inc., for example, has worked to recruit people who suffer from common difficult-to-manage conditions, such as diabetes and congestive heart failure, into a special chronic care program meant to provide them with extra help to address social and basic needs, as well as medical ones.
Enrollment in this group rose by more than 20 percent in the first six months of this year to 512,00 Medicare Advantage members, Humana said in a regulatory filing.
"These increases reflect enhanced predictive modeling capabilities and focus on proactive clinical outreach and member engagement," the Louisville, Kentucky–based company said. "We believe these initiatives lead to better health outcomes for our members and lower health care costs."