Medicare advantage insurers won't see increase in 2011

Payments for Medicare Advantage plans, which are operated by private health insurers, will be frozen at this year's rates in 2011, Bloomberg BusinessWeek reports. The freeze comes as part of the new health law, the Centers for Medicare and Medicaid Services said. "Before the announcement, the program was expected to account for 14 percent of earnings next year at Minnetonka, Minnesota-based UnitedHealth and 42 percent for Louisville, Kentucky-based Humana, Dave Shove, a BMO Capital Markets analyst based in New York, said March 31 in a note to clients" (Nussbaum, 4/6).

Dow Jones Newswires/NASDAQ: Before the freeze was announced, the Medicare agency had anticipated 1.38 percent rate increases for the Advantage plans. "The Obama administration and congressional Democrats have pushed cuts in the growth of payments to Medicare Advantage plans as a way to help pay for the broader health-care overhaul" (Yoest, 4/5).

U.S. News & World Report quotes Tricia Neuman, director of the Medicare Policy Project at the Kaiser Family Foundation: "It's hard to say how plans will respond to changes over time but they are likely to make adjustments once the payment changes take effect," says Neuman. "Medicare Advantage plans are required to cover Medicare benefits, so any cuts to Medicare Advantage plans will be extra benefits such as contributions toward eyeglasses or fitness club memberships" (Brandon, 4/5).

Modern Healthcare: The federal agency has also meanwhile dispersed $41.6 million to state health insurance assistance programs to counsel beneficiaries "about their Medicare health and prescription-drug plan choices"  (Lubell, 4/5).

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This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.