Medicare Advantage Plans Offered 0.25% Raise From Feds

No one expected Medicare Advantage (MA) to do as well as it’s doing. It was supposed to be fading, but has turned out to be a bulwark for insurers in the hailstorm of a changing health care system. Enrollment in MA grew by 7% last year, Reuters reports, and now covers more than 18 million beneficiaries, about a third of all Medicare beneficiaries.

MA plans will see an increase in payments of 0.25%, according to a proposal put forward by the government on Wednesday. “The payment rate increase of 25 basis points was in line with estimates that analysts had released ahead of time…,” Reuters reports. Judging by the lack of movement in health insurance stocks, the number seems to hit a sweet point, and insurers have not reacted.

Perhaps they are holding their fire. Pistil Smolinski, managing director at the consulting firm Capitol Street, tells Reuters: “The 2018 update is only a smidge better than flat which I suspect may anger some plans”

The Congressional Budget Office in 2010 projected that enrollment in MA would decline from 10.9 million (or 24% of total Medicare enrollment) to 8.2 million (14% of total) by 2015. At the same time, spending on traditional fee-for-service (FFS) Medicare slowed, also confounding expectations. Per capita Medicare spending in 2014 was estimated to be about $11,170, which is $1,200 less than what the CBO projected in its 2010 projection.

Source: Reuters