Archive for October 1st, 2010

Medicare Advantage Changes Will Effect UPMC

Friday, October 1st, 2010

There could be some drastic changes to Medicare Advantage plans after everything is said and done with the Health Care Reform Act of 2010.  According to Texas’ The Daily Tribune author Marcia Davis-Seale, “Obamacare could shut out Medicare Advantage.”  While it seems unlikely that Medicare Advantage plans will go away altogether, the number of Medicare participants enrolled in such plans is estimated to go from 24% of participants down to 14% of them.  Compare health insurance costs related to Medicare Advantage and as the government subsidizes less for insurance companies, doctors, and hospitals, they likely will not be accepting as many Medicare Advantage plans. As many of 50% of current plan participants may have to switch to traditional Medicare.

Currently about a quarter of Medicare recipients have Medicare Advantage plans, accounting for around 10 million seniors.  The plans are alternatives to Medicare and offer a combination of Medicare plans along with extra benefits like dental and vision coverage and even gym memberships.  Since the plans are heavily subsidized by the government, these extras rarely effect plan holders with extra costs.  It costs the government between 13 and 20% more to fund Medicare Advantage plans than traditional Medicare plans.  As the government cuts back the amount it is spending on these costly plans over the next ten years, insurance companies may be more likely to drop the plans.  Insurers also have to comply with the new rule that they spend 85 cents of every dollar on actual medical care for their customers so that may be a cost cutting factor as well.

Everyone on Medicare will continue to receive the same benefits they have always been guaranteed.  The extra $1000 spent per Medicare Advantage recipient has been passed along to all Medicare policy holders over the years.  Now that the government is working to “level the playing field” in regards to Medicare it remains to be seen what insurance companies like UPMC will do.  Gym memberships and other perks will likely be cut by many, but seniors don’t have to worry about losing basic Medicare benefits like hospital and doctor care.  It will continue to be a balancing act for all of those involved to maintain seniors’ health care needs, keep Medicare fiscally afloat, and pay an adequate amount to private health insurers going into the future.