Defying GOP’s Doomsday Predictions, Medicare Advantage Enrollment Increases, Premiums Fall

Average Medicare Advantage premiums will decrease by 4 percent in 2012 and enrollment in the program will grow by 10 percent, the Department of Health and Human Services (HHS) announced today, undermining Republican claims that reductions in government payments to private insurers will devastate the program. Plan enrollment is “the highest overall enrollment of beneficiaries as a percent,” CMS Deputy Administrator and Director Jonathan Blum said, predicting continued growth into the future. Just one percent of beneficiaries will have to enroll in a new plan because their existing policies are no longer available.

Throughout the health reform debate, however, Republicans argued that lowering the subsidy to private insurers participating in Medicare Advantage — the Affordable Care Act eliminates $145 million over 10 years from the program — would force companies to stop offering coverage, causing 10 million seniors to lose their Medicare benefits. Republicans introduced numerous amendments instructing Congress to remove the cuts to the Medicare Advantage program and Sen. John McCain (R-AZ) even urged seniors to rip up their AARP cards in protest of the organization’s support for the reductions.

Executives from firms that participate in Advantage recently told the Kaiser Family Foundation that even with the cuts, “the amount of money that flows to Medicare plans is significant. A single Medicare enrollee draws about $910 a month for private plans, according to Barlcays Capital analyst Joshua Raskin. Plans expect to earn about $41 a month per member, after paying medical expenses. That’s more than double the average earnings from commercially insured members, according to Raskin’s analysis.” The analyst said “he expects plans to continue to remain profitable and grow, despite the cuts, albeit more slowly than they would have without the health law.”

The enrollment figures also exceed projections by the Congressional Budget Office and the Medicare Trustees, both of which predicted that 2012 enrollment would only increase to 10.2 million and 12.1 million respectively.