The Verdict Is In: Medicare Advantage Will Suffer Under Obamacare

Kathryn Nix / October 15, 2010

The outlook for seniors’ Medicare Advantage (MA) plans is grim under the new health care law. Though seniors’ premiums will drop 1 percent in the new year, this will be the exception to the rule over the next decade.

Medicare Advantage is a popular alternative to traditional fee-for-service, allowing seniors to choose their health plan from among participating private plans. If seniors choose a plan that is less expensive than the benchmark price, they receive a rebate that can be used to add extra benefits, such as dental or vision care, or to reduce co-payments or premiums.

The new law, however, will lower the benchmark price set for MA plans. In a recent letter, the Centers for Medicare and Medicaid Services’ (CMS) Chief Actuary Richard Foster explains that changes made by the new law “are expected to reduce MA rebates to plans and thereby result in less generous benefit packages.” For seniors who wish to keep their current plans, out-of-pocket costs will increase. Foster writes, “Prior to this legislation, the average annual MA rebate was estimated to grow from $1,093 in 2010 to $1,580 in 2019. Under the new provisions, the average MA rebate is expected to decline from its current level to $43 in 2019.” (more…)