This week America's Health Insurance Plans (AHIP) warned that the potential 2.3 percent reduction in Medicare Advantage payments proposed by the Department of Health and Human Services (HHS) combined with PPACA's payment cuts will result in benefit reductions and premium increases of $50 to $90 on average. These cuts would affect 14 million seniors which is roughly 28 percent of all Medicare beneficiaries. An analysis prepared for AHIP states that the effect of the changes from both PPACA and the new payment cuts will result in an estimated 6.9 to 7.8 percent cut to Medicare Advantage plans in 2014.
Please give us your feedback!
The cuts were proposed last week by the Centers for Medicare & Medicaid Services (CMS). New rules will be published by CMS on April 1, 2013. Subsidies will be slashed and access to the report will be severely restricted, according to the AMAC industry analysts.
The analysis was made by actuaries at Oliver Wyman and was prepared for AHIP. The Oliver Wyman report states, "Virtually all of the 14.1 million Medicare beneficiaries are likely to be affected by these changes, either through increased premiums, reduced benefits, or plan exits from local markets."
The major impact of these changes will reduce Medicare Advantage in 2014 by more than eight percent or nearly $11 billion. Understandably, health insurance stocks reacted to the news negatively and took a hit. The costs per person for Medicare Advantage plans are a bigger drop than many analysts had anticipated.
So far in 2013, only four percent of PPACA's $200 billion in Medicare Advantage cuts have gone into effect. However, the Congressional Budget Office (CBO) projects that, after it's fully phased in, the cuts alone will result in three million less people in the program. The PPACA's new health insurance tax will begin in 2014 and Oliver Wyman has previously estimated that this tax alone will cause approximately $220 in higher out-of-pocket costs for seniors, reduced benefits for next year, and $3,500 in additional costs of the next 10 years.
AHIP contrasted the cuts by releasing projections for medical cost increasing three percent. Karen Ignagni of AHIP stated "The proposed changes to Medicare Advantage payments are a crushing blow to the millions of seniors and people with disabilities who count on this critically important part of Medicare."
How do you feel about these rate increases to Medicare Advantage? How do you think it will affect your business? Do you think this is positive for your Medicare Supplement business?
- Equitable Life Med Supp Now Available in AZ, NC, TX, UT, WV - Learn More
- Reach New Sales Heights with Stonebridge Life Med Supp - Learn More
- Gerber Life Med Supp MN Application Change - Learn More
senior market news,
Medicare Advantage News,
Equitable Life Medicare Supplement,
Gerber Life Medicare Supplement,
Stonebridge Medicare Supplement