Study: Medicare+Choice Premiums Slightly Up, Benefits Reduced

Sunday, April 13, 2003

April 14, 2003

WASHINGTON - Medicare HMO premiums rose only slightly in 2003, but Medicare+Choice insurers made up for the small increase by reducing benefits, according to a report released last week by the Commonwealth Fund, the Associated Press reports.

Researchers from Mathematica Policy Research analyzed premium rates and benefits for Medicare HMOs between 1999 and 2003 for more than 4.5 million beneficiaries. The study found that average monthly premiums rose from $23 in 2001 to $37 in 2003, while beneficiaries experienced a "subtle erosion" of benefits.

Among the study's other findings:

In 2003, 7.4% of Medicare HMO plans offer brand name drug coverage with a copayment of between $10 and $20, down from 27% in 2002.

Generic drugs with a copay of between $10 and $20 are offered by 62% of plans in 2003, down from 71% in 2002. The number of plans that have no cap on drug costs fell from 6% last year to 3.4% in 2003. The number of plans with a copay of $15 or more for a physician visit more than doubled to 15.5%.

The rate of plans that charge a copayment for hospital visits increased, from 73.4% in 2002 to 80% in 2003.

The number of Medicare+Choice plans dropped 3% in the last year, to 333, while enrollment in the plans fell 8%, to 4.56 million.

According to officials from Medicare HMO plans, the reduction in benefits is partly due to the 1997 Balanced Budget Act, which mandated that payments to Medicare HMOs rise by no more than 2% each year, at a time when medical costs have risen between 17% and 18% per year, the Denver Rocky Mountain News reported.

While the plans have typically increased premiums - the average premium rose 196% from 1999 to 2003 - many plans this year are choosing to limit benefits instead, according to the Associated Press.

"Plans don't want to scare healthy people away with high premiums. You are seeing the plans trying to raise money in different ways like charging more for hospital stays and drug copays," Marsha Gold, a senior fellow at Mathematica and one of the authors of the study, said.

The trend to reduce benefits has some advocates for Medicare beneficiaries worried, the AP/Tribune reports.

" Medicare HMO patients are really disadvantaged and hurt by this [trend]. It's not like they have clout to change it or lots of other options," Barbara Cooper, senior program officer for Medicare's Future at the Commonwealth Fund, said.