Some Medicare prices to drop

Slight premium reductions to come for seniors in private plans

— Seniors enrolled in popular private health-insurance plans through Medicare will pay a little less on average next year, the Obama administration said Tuesday.

The average monthly premium in so-called Medicare Advantage plans will dip to $35.69 in 2011, a 45-cent reduction from $36.14 this year, Medicare officials said.

It’s a savings of only about 1 percent but Health and Human Services Secretary Kathleen Sebelius said that’s a lot better than what happened this year, when premium increases averaged 15 percent.

The fate of the plans has been a source of concern because the new health-care law cut payments to the private insurance companies that operate them. However, payment rates are frozen for 2011 and significant reductions are still a couple of years away.

About 11 million senior citizens - one-fourth of beneficiaries - are signed up in the plans, and Medicare projects enrollment to increase by 5 percent in 2011.

“Despite lots of predictions of doom and gloom, the Medicare Advantage program is stronger than ever before,” Sebelius said.

Administration officials say they expect it to stay that way in the future. They credit stronger oversight from Medicare for the premium dip and predict insurers aren’t going to walk away from a line of business that brings them millions of customers, even if the companies get paid less per client. After all, the babyboomer generation will soon be signing up for Medicare.

“The plans know in advance what the law says forthe future, and despite that they remain very strongly committed to the program,” said Jonathan Blum, head of the Medicare division that oversees the plans. “We believe that the program will be stronger and provide better value.”

Nonetheless, averages are just that. Some senior citizens will see higher premiums, while others will see a drop. Because of that, advocates encourage Medicare beneficiaries to shop around each year during open-enrollment season, which starts Nov. 15.

With changes looming, some plans have decided they’ll no longer participate in the program.

Of the senior citizens whose plans are being discontinued, all but 2,300 have a choice of another Medicare Advantage plan in their area. Private plans tend to market themselves in cities and suburbs where they can build networks of hospitals and doctors. Senior citizens in rural areas usually have fewer planoptions.

Beneficiaries can also opt for traditional Medicare, but they will likely have to buy supplemental insurance to cover deductibles and costsharing.

Separately some 300,000 senior citizens will have to switch prescription-drug coverage as a result of administrative changes to winnow duplicative plans. Private analysts had projected a much larger number, about 3 million.

Blum said the administration negotiated with 300 Medicare Advantage plans to push back proposed increases in premiums and cost-sharing that were deemed too high.

“We worked with those plans to bring them into more affordable ranges,” he said.

Additionally, the new health-care law provides senior citizens with cost-free preventive care starting next year. It will be available to all beneficiaries, whether they pick a private insurance plan or opt to stay in traditional Medicare.

Front Section, Pages 4 on 09/22/2010

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