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The Honolulu Advertiser
Posted on: Saturday, February 20, 2010

Premiums jump 14 percent on Medicare private plans

By Ricardo Alonso-Zaldivar
Associated Press

WASHINGTON Millions of seniors who signed up for popular private health plans through Medicare are facing sharp premium increases this year another sign that spiraling costs are a problem even for those with solid insurance.

A study released yesterday by a major consulting firm found that premiums for Medicare Advantage plans offering medical and prescription drug coverage jumped 14.2 percent on average in 2010, after an increase of only 5.2 percent the previous year. Some 8.5 million elderly and disabled Americans are in the plans, which provide more comprehensive coverage than traditional Medicare, often at lower cost.

The Medicare findings are bad news for President Obama and his health care overhaul that is bogged down in Congress.

That's because the higher Medicare Advantage premiums for 2010 followed a cut in government payments to the private plans last year. And the Democratic bills pending in Congress call for even more cuts, which are expected to force many seniors to drop out of what has been a rapidly growing alternative to traditional Medicare.

Republicans have seized on the Medicare Advantage cuts in their campaign to derail the health care bills, and seniors are listening. Polls show seniors are more skeptical of the legislation than the public as a whole, even though Democrats would also reinforce original Medicare by improving preventive benefits and narrowing the prescription coverage gap.

At a town hall meeting yesterday outside Las Vegas, Obama said the Medicare Advantage plans are getting a "sweet deal" from the government overpayments averaging 13 percent. "All we've been saying is 'Let's make sure that there's a competitive bidding process, and that we are getting the absolute best bargain,' " the president said.

The Avalere study found that, for consumers, Medicare Advantage is becoming less of a bargain. The premium for 2010 is $39.61, representing an increase of nearly $5 a month from the previous year. That compares with a rise of less than $1.75 a month in 2009. The averages are adjusted based on enrollment levels in particular plans that offer medical and prescription coverage, reflecting the choices that seniors make.

"These premium increases fit within a broader trend of increased financial pressure on the insured," said Lindsey Spindle, a vice president of Avalere Health, a data analysis firm that produced the statistical study. "We see very large premium increases and a continued upward creep in how much out-of-pocket expenses beneficiaries are expected to pay, such as copayments."