How Does Health Reform Affect Medicare Advantage Health Plans?

One reason for ever-increasing Medicare costs—and the premiums subscribers pay as well—is the additional subsidies the federal government pays to private insurers. Under the Medicare Advantage program, services are provided to beneficiaries through private plans, and payment levels have increased dramatically since 2003. On average, the federal government pays 14% more to insurance companies for providing such coverage than it does within the traditional Medicare program.

Overpayment Produces No Results

Since insurance companies are free to determine how the additional funds they receive will be used, there is no indication that the quality of the services or benefits subscribers receive are superior in any way. Instead the money is used for various administrative costs, advertising, and increasing profits. In addition, since the program has built-in flexibility in regard to cost sharing, those enrolled in a Medicare Advantage Health Plan often pay more out-of-pocket costs than they would otherwise.

Effect Of Health Care Reform

In this effort, most of the spending cuts will be related to your Medicare Advantage Health plan. Many providers referred to above offer additional coverage, and some of those services will be dropped as the government subsidies for the program are brought in line with traditional Medicare expenses. In 2011, the payment rates for these plans will be frozen. After that, they will be reduced gradually, giving insurers time for adjusting to these new regulations.

Changes In The Program

Authorities at the Centers for Medicare and Medicaid Services (CMS) anticipate that the number of enrollees in Medicare Advantage Health plans will be cut by 50% when the mandates of the Health Care Reform Bill become effective in the next few years. It is also understood that when the government subsidies to the program are cut, the benefits and services offered to subscribers will be reduced accordingly.

Related posts:

  1. How Will The Health Care Reform Affect Medicare Supplementals?
  2. Will Money Be Taken From Medicare For The Health Care Reform?
  3. Is Medicare Part D The Answer To Health Reform?
  4. How Will The New Health Care Law Affect Medicare Part D?
  5. Can Private Health Plans Reduce My Medicare Benefits?

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