Medicare Advantage cuts will cost seniors, AHIP saysNews added by Benefits Pro on March 3, 2014

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By Kathryn Mayer

The Obama administration's proposed cuts to Medicare Advantage could not only cost seniors in terms of benefits and choices, it may literally cost them up to $900 more next year, the health insurance industry is arguing.

America’s Health Insurance Plans, the carrier group that has for months urged the administration to leave the program alone, slammed the administration’s moves to the program in a new report this week. In it, it said seniors and people with disabilities enrolled in Medicare Advantage plans would face premium increases and benefit reductions of $35-$75 per month, or $420-$900 next year. Numbers were crunched by consulting firm Oliver Wyman.

Also read: Medicare Advantage fight rages on

Last week, the Centers for Medicare and Medicaid Services announced the proposed changes to Medicare Advantage, indicating a roughly 2 percent cut.

Oliver Wyman, though, found the proposed changes could result in a 5.9 percent cut to Medicare Advantage payments in 2015.

AHIP said the new cuts would be especially damaging when combined with last year’s 4-6 percent cuts to the program.

“If the new changes proposed by CMS are implemented, the program would be hit by a double-digit cut over just a two-year period, causing cost increases and benefit reductions for seniors of $65-$145 per month, or as much as $1,740 over two years, according to the latest Oliver Wyman analysis,” AHIP reported.

That could result in a “high degree of disruption in the MA market,” including the “potential for plan exits, reductions in service areas, reduced benefits, provider network changes, and MA plan disenrollment,” it said.

The analysis also asserted that the cuts “would disproportionally affect beneficiaries with low incomes, including the 41 percent of MA enrollees with annual incomes below $20,000 for whom the potential increase in out-of-pocket costs would constitute a significant burden.”

“CMS should keep Medicare Advantage payment rates flat next year to protect seniors from another round of harmful cuts that would put at risk the high-quality coverage they like and rely on today,” said AHIP President and CEO Karen Ignagni.

An Aetna spokesperson also said this week that further cuts to the program will "disrupt the Medicare Advantage program and be harmful to seniors.”

Moody's Investor Service also said this week that next year’s proposed rates are a "credit negative" for carriers.

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