Future of Medicare Advantage Plans

Tuesday, April 1, 2008

Baucas Tackles Cuts in Subsidies for Medicare Advantage Montana Senator Max Baucas, Chairman of the U.S. Senate Finance Committee, wants to reduce funding of Medicare Advantage Plans.  Why?  Because a government study showed that insurance companies on average were being paid an additional 13% above the cost of traditional Medicare.  What would be the result of this?  There are several things that could happen.  One is that once the funding is reduced, insurance companies might withdraw from the Medicare Advantage market since it will become less profitable.  Another natural result would be higher premiums for Medicare Advantage insureds.  Premiums might be raised to offset the decrease in funding.  Lastly, benefits could be reduced.  Plan copayments and out-of-pocket maximums would be raised to move more responsibility toward the insureds.

Medicare Supplements are great products for seniors offering access to more doctors and hospitals in most cases than Medicare Advantage Plans and also lower out of pocket costs when receiving medical attention in many cases.   Medigap polices (Medicare Supplements) would become even more attractive if Medicare Advantage Plan funding was cut and can be considered as an alternative.