Medicare Advantage Premiums to Fall in 2011

CMS' tough-love negotiations with Medicare Advantage insurers means lower premiums in 2011.The average premiums paid by individuals for private Medicare Advantage plans — which approximately 25 percent of beneficiaries choose — will fall slightly in 2011.  That’s good news, considering that commercial insurance premiums for many people under 65 and some small business are expected to rise between 10 and 25 percent. Insurers blame the new healthcare reform law for the increases, a position that President Barack Obama and Congressional Democrats dispute.

“Despite the claims of some, Medicare Advantage remains a strong, robust option for millions of seniors who choose to enroll or stay in a participating plan,” said Dr. Donald M. Berwick, Centers for Medicare and Medicare Services (CMS) administrator.  Medicare officials negotiated with insurers to hold the line on premiums and co-pays.  “We negotiated more aggressively than in the past,” said Jonathan D. Blum, Medicare deputy administrator.  “As a result, some plans changed their bids to produce more value for beneficiaries.  On average, Medicare Advantage premiums will be one percent lower in 2011 than today.  Medicare Advantage projects that enrollment will increase by five percent in 2011.”

John K. Gorman, a former Medicare official who is now an insurance industry consultant, says the “announcement shows that there is a new sheriff in town.  Medicare officials were very specific and very forceful.  Insurers succumbed to the government’s demands and stayed in the Medicare market because they have become much more dependent on Medicare business.”

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