Average HMO Medicare Rate Set to Double
Medicare managed-care plans--often the only way low- and middle-income seniors can afford comprehensive health care--will more than double in cost next year for millions of older Americans.
Seniors nationwide who were lured into the program over the last decade with promises of free coverage with unlimited access to prescription drugs will face premiums in 2001 as high as $179 a month and, in some cases, a limit of just $500 per year for medications. Los Angeles and Orange counties, where the federal government pays health plans more to care for Medicare recipients, will be mostly untouched by the changes.
Next year will mark the first time since health maintenance organizations began providing Medicare coverage that a majority of the members will face premiums. And for the first time, most will not have access to prescription drug coverage, according to Nancy-Ann DeParle, who heads the federal Health Care Financing Agency, which oversees Medicare.
"Premiums are increasing by a weighted average from $12 to $26 a month," DeParle said, which is on average more than double their current levels. "And the generosity of drug coverage will also decline."
More than 6 million of the 40 million Medicare recipients in the U.S. receive coverage through HMOs.
Health plans said as early as July that they would raise premiums and lower benefits, citing what they said were inadequate payments from the federal government to cover the cost of providing care.
But the actual price hikes and benefit reductions, which were released by the federal government Friday, are more dramatic than many observers expected. Only a few metropolitan areas--among them Los Angeles and Orange counties, and parts of New York, New Jersey and Pennsylvania--were spared, because the federal government pays more to cover Medicare beneficiaries in certain counties where the cost of living is higher.
Everywhere else, the premium hikes and benefit reductions present a double blow to seniors, who learned earlier this year that a number of HMOs are dropping out or cutting back participation in the program. Nearly 1 million Medicare recipients will either lose their managed care coverage or will have to switch to a new plan.
"This is really a bait and switch," said Jamie Court, who heads the advocacy group Consumers for Quality Care. "People joined HMOs to get the prescription drug benefits, and those benefits dried up. Now we're seeing premium increases that add insult to injury."
