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Higher Fees Forecast at Medicare HMOs

Out-of-pocket costs for premiums, co-payments and prescription drugs will rise 10% in 2003, a private study finds.

August 11, 2003|From Associated Press

Out-of-pocket costs will jump 10% in 2003 for people enrolled in Medicare health maintenance organizations, a study has found.

Patients in Medicare HMOs will spend $1,964 on their HMO premium, the Medicare Part B premium, doctor and hospital co-payments and prescription drugs, according to the study. That is a 101.3% increase from 1999.

The study was commissioned by the Commonwealth Fund, a private foundation supporting research on health and social issues.

Congress is debating whether to add a prescription drug benefit to Medicare that is expected to rely heavily on private insurers for delivery.

"It's not clear that Medicare HMOs are less expensive than traditional Medicare," said Marsha Gold, a senior fellow at Washington-based Mathematica Policy Research, which conducted the study by analyzing current and historical Medicare data.

Gold said Congress should consider the financial burden that private plans place on patients while discussing changes to the Medicare program.

The biggest chunk of spending, 36%, is for the Medicare Part B premium, which costs $704 a year and covers ambulatory care. Medicare does not charge for Part A, which covers hospitalization.

The biggest rise in spending was for the Medicare+Choice premium, which jumped an average of 18% to $447 a year. It represents 22% of total spending.

Drug spending represents 26% of the total, or $512 a year. It rose 11%.

Physician and hospital co-payments represented 15% of the total, or $301 a year, which was relatively flat with 2002.

Patients who describe themselves as in poor health and are enrolled in Medicare+Choice plans will see their costs rise 10.9% to $5,305.28.

Those who describe themselves as in fair health will see their costs jump 10.8% to $2,695.70.

According to a 1999 Medicare Current Beneficiary Survey, 15% of Medicare+Choice enrollees reported being in fair health, while 6% said they were in poor health.

The study also found that Medicare patients enrolled in preferred provider organizations, which offer greater flexibility, will spend $2,884 this year. The PPOs are part of new demonstration project so there is no comparative data.

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