Medicare premiums to drop in 2012, rolls will rise

The Obama administration says premiums for Medicare Advantage will shrink and enrollment will rise next year, framing the news as evidence that the president’s new health care law won’t push seniors out of the supplemental plan as some have feared.

Officials said Thursday morning they expect average premium costs to decline by 4 percent and enrollment to rise by 10 percent in 2012 for the program, which allows seniors to obtain additional insurance coverage through a private company.

“Many people have raised fears that under the Affordable Care Act (ACA) beneficiaries will see their Medicare options shrink and premiums rise,” said Secretary of Health and Human Services Kathleen Sebelius. “Instead, we have seen just the opposite.”

While the short-term growth is good news for the administration, it doesn’t answer questions about what will happen to the program long term. Last year, the chief actuary for the Center for Medicare and Medicaid Services (CMS) projected that enrollment in Medicare Advantage would drop one-third by 2016 and 50 percent by 2018.

The dip is expected because the federal health care law reduces payments to Medicare Advantage plans over time, bringing them closer to the average costs of care under the basic Medicare program. To help pay for other provisions in the ACA, the law cuts $541 billion from Medicare during the next 10 years, taking about one-fourth of that total from Medicare Advantage.

Republicans jumped on the dire predictions, using them to fuel complaints that the ACA will reduce coverage options for seniors by forcing them out of Medicare Advantage. At the time, Sen. Chuck Grassley, Iowa Republican, accused the administration of trying to downplay the impact of the health care overhaul on the Advantage plans.

HHS officials brushed off suggestions that the long-term health of the program could be in jeopardy.

“There were projections made a year-and-a-half ago, and those were made in the past,” said Jonathan Blum, deputy director for CMS.

Mr. Blum cast the projected growth as evidence that private plans contracting with the federal government to offer Medicare Advantage remain confident in the program and plan to continue participating.

“The takeaway I have is the plans have made a very strong statement they intend to commit to the program,” he said. “I think if we were going to see pullouts, we would have seen them by now. The program is going to continue to be strong.”

Higher expected enrollment next year continues an upward arc of interest in the program, which has doubled since 2005. Nearly one-fourth of those on Medicare are currently enrolled in a Medicare Advantage plan.

Next year will also mark the second year in a row premium costs have dropped. Premiums in 2012 are projected to be 11.5 percent lower than 2010 premiums, officials said.

Officials also announced that Medicare enrollment, usually held from November through December, will begin one month earlier this year, on October 15, and last seven weeks.