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Last month the Center for Medicare and Medicaid Services (CMS) announced that the government would increase Medicare Advantage spending by 1.6% for 2012.  Primarily this increase is caused by a bonus payment program, controlled by the Affordable Care Act, created to improve the quality of care for people with Medicare by giving financial incentives to Medicare Advantage plans.  Those plans with a four or five star quality rating will get a higher payment; as well as, some counties getting more than others.  The CMS will also offer a special enrollment period in 2012 to help beneficiaries switch to a five star rating plan at any time during the year.  This increase also takes into account the changes to Medicare Part D for those seniors entering the “doughnut hole.”  These beneficiaries will receive a 50% discount on brand-name and 14% on generic prescription drugs, doubling what the program currently pays.  The unexpected news sent HMO stocks up in after-hours trading.  The final rate notice will be available April 4, 2011.

Agenda behind Medicare Advantage 2012 Increase Not Entirely Altruistic

The increase was decidedly unexpected and is now seen as a way to keep seniors happy through the 2012 elections. The Wall Street Journal reports, "The White House has apparently decided that it won’t enforce the unpopular parts of its health-care plan until after the 2012 election." Since seniors are the largest group of voters, this increase is seen as another temporary concession based on the public mood and to keep them happy in the election year.

Democrats dislike Medicare Advantage and Barak Obama vowed to eliminate the program when he said "We shouldn’t be rewarding the insurance industry for deceiving and defrauding our seniors" in 2007. Republicans like the program, showing that market pricing and competition are a better alternative to the government control of Medicare and that of the proposed health care law restrictions. Also, it is similar to the Medicare voucher program proposed by Paul Ryan. Ultimately, if the health care law goes though as it currently states, Medicare Advantage proposed cuts of $136 billion over the next ten years will have to go into effect as well. Meanwhile, the number of seniors in the Medicare Advantage program continues to grow, increasing 7% last year to 26% of Medicare beneficiaries.

What do you think about the proposed increases for Medicare Advantage as a way to keep voting seniors happy in an election year? Do you think it will work? Share your opinion in the comments.

Forethought Life Medicare Supplement Available in Nebraska and North Dakota

Effective March 9, 2011 Forethought Life Medicare Supplement is now available in Nebraska and North Dakota – please see the Forethought Nebraska Rates & App and the Forethought North Dakota Rates & App.

Woodmen of the World/Assured Life Rate Adjustment

Effective May 1, 2011 Assured Life Medicare Supplement rate adjustments for standardized plans in Alabama, Arizona, Illinois, Ohio, Oklahoma, Pennsylvania, Texas, and West Virginia; Medicare SELECT plans in Ohio, Pennsylvania, and Texas; and, Woodmen of the World standardized plans for Oregon, Utah, and Washington. Please see the WOW/Assured Rate Adjustment for May 2011.

Sources: MedPage Today, National Underwriter, Wall-Street Journal

Starting in January more affluent seniors have begun to pay higher premiums for their prescription drug benefits. Since 2007 high income beneficiaries have paid more on a sliding scale for Medicare Part B but this is the first year that scale has included Medicare Part D as well. Additionally, the provision in the health care law froze the income threshold that determines their costs, and it will not be adjusted for inflation through 2019. Senior advocates warn that requiring high-income seniors to pay more for their Medicare premiums might encourage them to look elsewhere for their insurance coverage. This could be significant, as wealthier seniors also tend to be healthier, thus affecting the lower-income seniors left behind with increases. Still, supporters believe it makes sense to require seniors with higher incomes to pay more for their Medicare benefits because it is guarantee issue and community-rated. Switching to private insurance is risky and they doubt that seniors could get a better deal. At this time, James Blum, deputy of the Center for Medicare and Medicaid Service, is not aware of anyone leaving the program because of higher prices for their Part B coverage. Blum is confident more affluent seniors will continue to stay in the Part D program as well, citing that the Part D plan is generous and the 50% discount (beginning this year) on prescription drugs once they reach the doughnut hole. In the past, roughly 5% of Medicare beneficiaries had been paying the higher premiums; however, with the sliding scale no longer in place this will increase to 10% by 2019 raising approximately $36 billion for Medicare.

How do you feel about affluent seniors having to pay higher premiums for their Medicare Part D coverage as well?

The Diminishing Medicare Doughnut Hole

Starting in 2011 seniors who hit the doughnut hole will have substantial discounts on their prescription drugs, increasing over time and completely closing the gap by the year 2020. This is a significant part of the health care law because in the past those who reached the gap often stopped filling their prescriptions due to the financial burden. Previously, Medicare beneficiaries were responsible for 25% of their prescription drug cost and their drug plan paid the extra 75% until they reach a total of $2530 at which time the senior entered the doughnut hole. However starting this year after reaching the doughnut hole beneficiaries will get a 50% brand-name and 7% generic drug discount until they have spent $3607.50. At that time the senior will be out of the doughnut hole and the drug plan will cover approximately 95% of the prescription drugs for the remainder of the year. By 2020 Medicare beneficiaries will only be responsible for 25% of their bill, no matter how large. This year alone the new plan will save approximately 4 million low-income seniors up to $1800 each. However critics believe this will result in drug companies raising the price on their drugs, to cover the difference. A price increase would affect all of those on Medicare not just those in the doughnut hole, creating another problem needing a solution.

What do you think of the new Medicare Part D benefit? Do you think drug companies will raise their prices to cover the difference?

Medicare Select

If you’re looking to offer your clients a Medicare Supplement Insurance Plan to accompany their Medicare, SELECT Supplemental Insurance offers you a variety of choices. Medicare SELECT plans are essentially lower-cost versions of traditional Medigap Insurance Policies, saving your clients approximately 15% on their premiums. Also, since the risk pool is smaller, SELECT plans tend to have fewer increases as well. The primary difference is that Medicare SELECT Policies require a client to go hospital on the company’s network (except in the event of an emergency). Request more information on Medicare Select plans.

United of Omaha Approved in CA, NE and SD

Effective February 3, 2010 United of Omaha is released in Nebraska and South Dakota – please see the United of Omaha Nebraska Rates and the United of Omaha South Dakota Rates.

Effective February 16, 2011 United of Omaha is released in California - please see the United of Omaha California Rates and the United of Omaha California Application.

Request information or call your marketing representative at 1-800-998-7715 for more information on United of Omaha.

Forethought Now Available in KS and UT

Effective February 2, 2011 Forethought is released in Kansas and Utah – please see the Forethought Kansas Rates and Application and the Forethought Utah Rates and Application or call 1-800-998-7715 to get contracted.

Sources: KHN