Health Insurance Debate(Photo: zimmytws / Thinkstock)

Health care experts generally expected the Affordable Care Act to hinder Medicare Advantage, government-funded private health care plans that millions of seniors chose as an alternative to the plan. initial Medicare.

In order to fund the expansion of coverage to uninsured people, the 2010 Act reduced federal payments to the plans by several billion dollars. Government budget analysts predicted that this would result in a sharp drop in the number of registrations as insurers reduced benefits, left the states, or ceased operations altogether.

But these projections turned out to be wrong.

Since 2010, the number of Medicare Advantage registrations has doubled to more than 20 million, from a quarter of beneficiaries to more than one-third.

"The Affordable Care Act has not killed Medicare Advantage, and the program is expected to continue to grow rapidly," said Bill Frack, L.E.K. Consulting, which advises health companies.

And as beneficiaries prepare to buy plans at open registration – Monday through December 7 – they will find a greater choice of insurers.

Fourteen new companies have started selling Medicare Advantage plans for 2019, several more than a typical year, reported Monday the Kaiser Family Foundation. (Kaiser Health News is an independent part of the foundation.)

Medicare beneficiaries can choose from about 3,700 plans for 2019, 600 more than this year, according to federal centers for Medicare and Medicaid services.

CMS predicts that the number of Medicare Advantage registrations will increase to nearly 23 million people in 2019, an increase of 12%. According to CMS officials, registrants who purchase new plans this fall will likely have lower or no premiums, as well as better benefits.

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Robert Berenson is a Medicare expert at the nonpartisan urban institute. With about 10,000 baby boomers growing every day in the Medicare range, the insurance industry is generally convinced that their future is Medicare and that it is crazy not to be more active in pursuing Medicare. "

Bright Health, Clover Health and Devoted Health, all for-profit companies, have started offering Medicare Advantage plans for 2018 or will do so for 2019.

Mutual of Omaha, a company owned by its policyholders, returns to Medicare Advantage for the first time in two decades, offering plans in San Antonio and Cincinnati.

Some non-profit hospitals, such as the BayCare Health system in the Tampa, Florida area, are offering Medicare plans for the first time.

Medicare beneficiaries in most countries have the choice of several plans, but their registration for years has been grouped into several for-profit companies – mainly UnitedHealthcare, Humana and Aetna, which have accumulated a little less than half of registrations national.

These insurance giants are expanding into new markets for next year. Humana will be offering its Medicare HMO in 97 new counties in 14 states by 2019. UnitedHealthcare will be installing in 130 new counties in 13 states, including Minnesota, its headquarters for four decades.

Additional benefits

Advantage plans have long been attractive to older people because they often include benefits – such as vision and dental coverage – that are not available with government-administered health insurance. Many private plans save seniors money because their premiums, deductibles, and other costs are lower than those who pay with initial Medicare.

But there is a tradeoff: private plans typically require seniors to use a small network of doctors and hospitals.

The federal government pays for plans to provide coverage to recipients. When the Democratic legislators drafted the Affordable Care Act, they targeted Medicare Advantage, as studies had shown that people enrolled in private plans cost the government 14% more than recipients of the original program.

Medicare plans have resisted billions of dollars in budget cuts in part by qualifying for new federal bonus payments available for those who score a "4" or higher on a scale of quality and satisfaction. the customer.

Health plans also generated additional revenue by identifying illnesses and health risks for members that would allow businesses to benefit from federal "risk adjustment" payments.

This has provided hundreds of billions of dollars more to Medicare plans, although congressional analysts and federal investigators have expressed concern that insurers are exaggerating how ill their members are.

A study conducted last year showed that these risk adjustments could add more than $ 200 billion to the cost of Medicare Advantage plans over the next decade, despite the lack of change in the health of enrollees.

The for-profit Medicare Advantage insurers achieved a 5% profit margin in 2016, twice the average of all Medicare plans, according to the Medicare Payments Advisory Board, which reports to Congress. This is a little better than the overall 4% margin of the health insurance sector reported by Standard & Poor's.

These profit margins could increase. The Trump administration has increased payments to Medicare Advantage plans by 3.4% in 2019, up 0.45% from the 2018 increase.

Betsy Seals is a senior consultant for the Gorman Health Group, a Washington-based company that advises Medicare Advantage plans.

She added that many health plans were reluctant to enter this market or expand after the election of President Donald Trump, as they were unsure whether the new administration would support the program. . But such concerns have been erased with the announcement of the 2019 repayment rates.

"The administration's support for Medicare Advantage is clear," said Seals. "We have seen the downstream impact of this support on new entrants to the market – a trend we expect to see continue."

Bringing consumers to change

Since the 1960s, Mutual of Omaha has sold Medicare Supplement policies – a hedge designed to help Medicare beneficiaries managed by the government to cover the portion of the costs that this program does not support. But the company only entered the Medicare Advantage sector once, and briefly, in its home state, Nebraska, in the 1990s.

"In the last 10 or 20 years, this has never seemed entirely appropriate," said Amber Rinehart, senior vice president of the insurer. "The main obstacle was the political environment and Medicare Advantage funding."

But after witnessing soaring Medicare Advantage registrations and the increase in government funding, the insurer decided that it was time to act.

"We have seen greater funding stability and the political headwinds are there," she said.

One of the challenges for new insurers will be to attract members of existing businesses. Recipients tend to stay with the same insurer for many years.

Vivek Garipalli, CEO of Clover Health, said his San Francisco-based company hoped to attract members by offering low-cost packages with a large selection of hospitals and doctors and allowing members to see specialists from his network without the prior consent of their primary care physician.

The company also focuses on Blacks and Hispanics, who are less likely to join Medicare Advantage.

"We see a lot of opportunities in markets where there are underserved populations," Garipalli said.

Clover received funding from Alphabet Inc., the parent company of Google. Clover sold Medicare diets in New Jersey last year and is expanding for 2019 in El Paso, Texas; Nashville, Tennessee and Savannah, Georgia.

Devoted Health, based in Newton, Mass., Moves to Medicare Advantage with projects in South Florida and Central Florida. BrightHealth, based in Minneapolis, is expanding into several new markets, including Phoenix; Nashville, Tennessee; Cincinnati; and the city of New York.

BayCare, based in Clearwater, Florida, is offering a Medicare program for the first time in 2019.

"We believe that there is enough market share to acquire and we are not afraid of competition," said Jim Beermann, vice president of BayCare's insurance strategy.

Hospitals are attracted to the Medicare business as it gives them access to more premiums for health care costs, said Frack, L.E.K. Consultant.

"You control more of your destiny," he says.

Kaiser Health News (KHN) is a non-profit news service covering health issues. This is an independent editorial program of the Kaiser Family Foundation which is not affiliated with Kaiser Permanente.

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