The seemingly impossible is happening in health care. A cost is going down, not up. The government today announced that lucky beneficiaries of the decline are Medicare recipients who take additional coverage from private insurers. The cost for that coverage will decline 1% in 2011.
Even better, officials said benefits will increase, as the costs are going down. A year ago, those same premiums rose 15%.
"Despite lots of predictions of gloom and doom, we are pleased to announce a program that is stronger than ever before," Health and Human Services Secretary Kathleen Sebelius told reporters today.
The cost decrease is for Medicare Advantage plans that Medicare recipients can buy to cover some costs Medicare itself doesn't pay. About a quarter of Medicare recipients buy the plans which average about $30 a month. The number of Medicare recipients buying the plans is expected to grow 5% next year.
Sebelius and officials of the government's Centers for Medicare & Medicaid Services cite the health care reform law for the changes. The law let the government start negotiating coverage with Medicare Advantage insurers and also banned insurers from imposing higher charges for some kinds of care.
Donald Berwick, the administrator of the Centers, said instead of just approving increases this year, the government negotiated with 300 plans that proposed increasing recipients' out of pocket expenses, but also their profit margins.
The result was the plans agreed to provide $150 million in additional benefits, he said. It showed that, "When we negotiate on behalf of beneficiaries, people will have better benefits," he said.
One of the new improvements is that all of the Medicare Advantage plans will now include a maximum out of pocket cost. Another is that effective Jan. 1 Medicare Advantage can no longer charge higher cost sharing for dialysis services, chemotherapy, or skilled nursing benefits.
About 5% of consumers on Medicare Advantage plans will have to change plans next year as either their insurer or the government decided not to renew their existing plan.
Dan Mendelson, CEO of Avalere Health, which follows health policy speculated the decrease also reflects the current state of the medical insurance business in a recession and the importance to companies of keeping the Medicare claims business.
"The medical service business is down this year. People are seeking less care," he said. He suggested that the combination of the economic woes and employers raising co-payments was contributing to that overall market. In the face of decreases in regular claims, he said insurers are aggressively looking elsewhere for more business.
"What is happening here is that Medicare is the beneficiary from positive market trends and prices."
He also said that the new availability of some brand name drugs as generics has also lowered costs.
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