(Reuters) - Elderly Americans have enrolled in privately managed Medicare health plans in record numbers even as average premiums continue to rise, the U.S. Centers for Medicare and Medicaid Services (CMS) said on Thursday.
The agency said the average Medicare Advantage premium would increase by $2.94 a month next year, to $33.90 per month, but 61 percent of enrollees will not see any premium increase at all.
Based on Medicare Advantage bids, CMS projects that plan enrollment will grow to just over 16 million in 2015 from 15.6 million this year, an increase of 3.17 percent, spokesman Raymond Thorn said in an emailed statement.
CMS said in April that it would raise its average reimbursement for Medicare Advantage plans by 0.4 percent. Insurers calculated that, due in part to mandates under the Affordable Care Act, reimbursement rates will effectively drop by 4 percent or more for 2015.
CMS is required under the ACA and by other laws to cut Medicare Advantage spending rates to the level of government administered fee-for-service Medicare.
“Next year will be a pivotal year for the Medicare Advantage market — the confluence of payment pressures and realignment in the provider markets is likely to have a significant impact on plan participation decisions and benefit design,” Dan Mendelson, chief executive officer at consulting firm Avalere Health said in a statement. “Growth in Medicare Advantage has become a de-facto version of Medicare reform, and will continue to be so in the future.”
CMS estimates that from 2010 to 2015, enrollment in Medicare Advantage plans will increase 42 percent and premiums will decrease by 6 percent.
Avalere attributes the shift to more enrollees opting for lower-premium plans that restrict pharmacy options and have higher out-of-pocket costs for consumers.
Private insurers manage Medicare benefits for about 15 million of the 50 million elderly or disabled Americans eligible for the program. Health insurers with large Medicare Advantage businesses include Humana Inc and UnitedHealth Group Inc.
Reporting by Deena Beasley; Editing by Lisa Shumaker