In something of a surprise announcement, Donald Berwick, Director of the Centers for Medicare and Medicaid Services, says that premiums for Medicare Advantage plans will decrease slightly in 2011. Berwick says that the monthly costs for MA plans for more than 11 million enrollees will drop by about 1%. In addition, enrollees should see some relief from the cost of prescription drugs and the continuation of certain no-cost preventative health care services.
In 2009, premiums for Medicare Advantage plans increased by an average of 15%. Berwick and other Medicare officials say that the health care reform act has provided the Medicare and Medicaid Service with additional negotiating power. Initially, officials used their newfound clout to drop about 300 previously approved Medicare insurance plans offered by private providers. According to Medicare officials, the rejected plans increased out-of-pocket costs without increasing benefits or covered services.
Most of the insurers then modified the plans to provide additional services at reduced costs. Upon reconsideration of the new offers, Medicare approved most of the 300 rejected plans. Fewer than ten of the original 300 rejected plans did not modify their initial proposed coverage, improve their benefits or reduce beneficiaries’ proposed out-of-pocket expenses. Upon review, these plans were rejected a second time and will not be offered in 2011.
Some analysts say that insurance providers are more willing to negotiate with Medicare because they are more dependent now upon Medicare premiums than they had been in the past; a large number of new enrollees are expected in the next decade; and the new health care legislation will open new opportunities for providers in the coming years.
Seniors who have elected Medicare Part D (prescription drug coverage) can also expect to see some decreases in their out-of-pocket expenses if they have significant prescription costs in 2011. The relief comes as part of the Obama Administration’s effort to eliminate the “donut hole” gap in Medicare prescription drug coverage. Reduced out-of-pocket expenses for Part D benefits will not translate into lower Part D premiums, however. Part D premiums are expected to rise in 2011 for most prescription drug plans.