Report predicts struggle for Medicare Advantage

When Richard S. Foster, the chief actuary for the Department of Health & Human Services, estimated the financial effects of the health care reform law last month, the news immediately became a political football that generated headlines. Foster estimates that national health spending will rise under health reform by $222 billion over the next 10 years. Because “most of the coverage provisions would be in effect for only 6 of the 10 years of the budget period, the cost estimates shown in this memorandum do not represent a full 10-year cost for the new legislation,” Foster states in his report.

The report represents the Niagara Falls of data that clinical executives at health plans will face as the Patient Protection and Affordable Care Act is studied. So far, as noted in Foster’s report, it doesn’t look good for Medicare Advantage. “The new provisions will generally reduce MA rebates to plans and thereby result in less generous benefit packages,” the report states. “We estimate that in 2017, when the MA provisions will be fully phased in, enrollment in MA plans will be lower by about 50 percent (from its projected level of 14.8 million under the prior law to 7.4 million under the new law).”

Source: Foster RS. Estimated financial effects of the Patient Protection and Affordable Care Act as amended. Department of Health and Human Services. April 2010

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