Medicare Advantage defies expectations by growing
Obamacare opponents have been warning for several years now that Medicare Advantage, the private plan option that seniors can pick instead of traditional fee-for-service Medicare, would fail because of the healthcare law’s impact on the program. The prediction was that the gradual elimination of extra federal reimbursements to Medicare Advantage would kill it. But the opposite is happening.
Advantage plans, which combine Part A (hospitalization) Part B (outpatient services) and usually Part D (prescription drugs), are on a big-time roll. Enrollment has jumped an impressive 10 percent in each of the past three years, according to data compiled by the Kaiser Family Foundation (KFF), a non-profit healthcare research and policy organization. About 28 percent of all Medicare enrollees this year are in an Advantage plan
The growth of Advantage likely will shift into an even higher gear during the next few years following the launch of the state public insurance exchanges under the Affordable Care Act (ACA). Most are managed care plans – 65 percent are health maintenance organizations (HMOs) and 22 percent are preferred provider organizations (PPOs), according to KFF.
Savings on premium costs are a big driver of Advantage plan growth. Enrollees pay their regular Part B premium, which is$104.90 this year. The Advantage plans also can charge a supplemental premium, but many don’t. This year, 55 percent of enrollees are in plans with no extra premium, and two-thirds of HMO Advantage plan members pay nothing extra, KFF says.
That means Advantage participants do not pay standalone premiums for prescription drug coverage, averaging $30 per month this year. They also are not paying for Medigap supplemental plans, which are popular in traditional Medicare and cover deductibles and coinsurance for long hospital stays and outpatient services, and help lower out-of-pocket costs.
Advantage plans also are gaining because the baby boomers coming into the Medicare system are accustomed to managed care.
The savings on premiums are an important plus for healthy seniors, since their overall usage of care will be low and out-of-pocket costs will be minimal. Baker urges less-healthy seniors to proceed with caution.
If you’re a relatively healthy 65-year-old who goes to the doctor once a year, you will save some money on premiums,but costs can escalate if you get sick.
If you are inclined to take traditional Medicare, there is an advantage to picking it when you first enroll because the Medigap policy won’t be able to exclude you for any pre-existing condition or charge a higher premium due to any past health problems. Depending on your state, you might have trouble getting a Medigap policy, or have to pay more, if you try to get a policy past that point.
California License #0B56846