I have lost track of the number of clients who have asked me how Obamacare will affect their Medicare Advantage plan. They saw so many advertisements during the election campaign about how millions of seniors will lose their Medicare Advantage plan, and how $700 billion is being “stolen” from Medicare to be used for Obamacare. They are worried.
I tell these folks that I read a lot about Medicare and Obamacare – and I don’t think Medicare Advantage is going anywhere but up. In fact, since 2010, when Obamacare was passed into law, Medicare Advantage enrollment has grown 28%. On top of that, enrollment in Medicare Advantage is expected to grow 11% from 2012 to 2013.
I tell people that Obamacare does cut payments to Medicare Advantage plans because, since 2006, Advantage plans have been overpaid by 10 – 14% each year. This has been very good for insurance companies’ profits, but it is not good for the Medicare budget. But the reductions in payments to Medicare Advantage plans are taking place over several years so there is no big financial shock that would drive insurance companies out of the business.
According to CMS (Centers for Medicare and Medicaid Services), Obamacare payment cuts have had no negative effect on Medicare Advantage (MA) premiums and co-pays. Of course, MA co-pays have been inching up each year – but that was happening before Obamacare.
I have written previously about how big insurance companies like United, Aetna, Wellpoint, and Cigna have spent billions of dollars buying Medicare Advantage plans. They seem pretty sure the Medicare Advantage business will be generating profits for years to come.
In Maricopa, Pima, and Pinal counties in Arizona, nearly 50% of Medicare beneficiaries are enrolled in Medicare Advantage plans. In Florida, California, Pennsylvania, and several other states,Medicare Advantage is huge. (Note: Florida Advantage plans are much better than what we have here in Arizona.) With over 12 million people enrolled in Medicare Advantage plans across the country, I don’t see any politicians (who want to keep their jobs) pushing to end Medicare Advantage.
Based on all the evidence I’ve seen, I’m pretty sure Medicare Advantage is here to stay.