OCTOBER 17, 2024
34 Million Seniors in Medicare Advantage Plans Face Rude Awakening
EMMA CURCHIN
October 15 marks the first day of open enrollment in Medicare Advantage (MA)
plans – a time that will deliver chaos and confusion for many of the 34 million
seniors who depend on these plans to pay their healthcare bills. It’s yet another
reminder that Medicare wastes billions of dollars funneling public money to
private companies that are primarily driven by profit-seeking.
Last year, more MA members than expected used their benefits to get
necessary medical care. One might assume that companies would expect
beneficiaries to use health care services. But after years of making outsized
profits, the insurance companies that own these plans are reacting to this by
downsizing plans, cutting benefits, increasing copays, and raising prescription
drug deductibles. In other words, Medicare Advantage beneficiaries are being
penalized for using the health care that they pay for.
Insurers are Dropping Plans and Slashing Benefits
Having spent decades luring enrollees and collecting premiums, two of the
biggest health insurers in the MA marketplace, CVS and Humana, are scaling
back, slashing benefits, and canceling plans with too many members who used
their health benefits. They are closing less profitable health plans that serve
half a million or more seniors, forcing them to sign up for other more expensive
or less generous coverage. Humana is set to leave 13 markets around the
country, affecting 560,000 beneficiaries or 10 percent of its plan members. The
reason for exiting? The CFO herself, Susan Diamond, said the specific markets
just aren’t profitable. CVS Chief Financial Officer Tom Cowhey sent a similar
message at a conference last month: “Could we lose up to 10 percent of our
existing Medicare members next year? That’s entirely possible. And that’s okay
because we need to get this business back on track.”
Medicare Advantage plans are being impacted all over the country. In Vermont,
MVP and WellCare are dropping two MA plans in January 2025. This will affect
6,000 older Vermonters who will need to quickly choose new plans in the
upcoming enrollment period. The MA plans cited spiking health care costs and
lower Medicare reimbursements. WellCare, which is run by Centene Corp,
pulled out of Alabama, Massachusetts, New Hampshire, New Mexico, and
Rhode Island in addition to Vermont, leaving 40,000 people and 4 percent of
MA beneficiaries without continued coverage past the enrollment period. In
New Hampshire, multiple MA plans are shutting down, leaving tens of
thousands beneficiaries scrambling. In Minnesota, nearly 60,000 people will
face disruptions to their MA plans.
Health systems and hospitals are also making the decision to cancel contracts
due to excessive prior authorization denial rates and slow payments from
insurers. Already 27 health systems have canceled their Medicare Advantage
contracts this year. MA plans can be especially harmful to rural providers who
already face financial hurdles, and may further struggle to continue providing
care to their communities due to unreliable and low reimbursements from
insurers.
The MA companies are following a similar strategy when it comes to
prescriptions. To weed out people who require expensive medications,
insurance companies are raising copays on drugs, hoping members will seek
more affordable coverage elsewhere. Roughly two-thirds of all 34 million
Medicare Advantage enrollees are in plans where the drug deductibles will
increase by 167 percent – or at least $200 next year.
And all of this is in addition to the serious, well-documented problems with
denials of care and coverage in Medicare Advantage that beneficiaries have
experienced since the program started.
Medicare vs Privatized Medicare Advantage
The purpose of insurance companies running Medicare Advantage plans is to
make money, pure and simple. Seniors across the country rely on these plans –
yet the record shows that insurers don’t value the quality and affordability of
care, and don’t want beneficiaries to use the medical services they need.
Beneficiaries are tossed aside because they live in an unprofitable market for
their insurer or because they are actually using the insurance they signed up for
to access services.
The purpose of Medicare is different: Protecting American seniors by
guaranteeing health coverage. Medicare Advantage funnels taxpayer money to
predominantly large insurance companies like CVS-Aetna and
UnitedHealthcare to manage what healthcare beneficiaries can access. This
has cost significantly more than Traditional Medicare, transferring hundreds of
billions of dollars in overpayments to large corporations who profit by getting
more taxpayer money and spending less on coverage. Now that beneficiaries
want to utilize the care they have been promised, these insurance giants are
choosing to raise healthcare costs for American seniors.
As we reach the open enrollment period from October 15 to December 7,
beneficiaries should consider signing up for Traditional Medicare to ensure they
get covered for the care they need from the doctors and hospitals they want to
use, without administrative hurdles. In Traditional Medicare, seniors need not
worry about insurance companies dropping or altering their plans or pushing
higher costs on them and reducing access. Since the government does not
require an out-of-pocket cap in Traditional Medicare – something that is
necessary in MA plans – beneficiaries should consider getting a supplemental
Medigap plan if they can afford it to get true comprehensive coverage.
In most regions, the companies assure that there will still be Medicare
Advantage plans available from other companies, or the same company. But
what is to say MA plans do not use profit as their north star once again next
year?
When healthcare is a business, regular people lose.
This first appeared on CEPR.
Emma Curchin is the Domestic Outreach and Research Assistant at the Center
for Economic and Policy Research.
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