Report: Proposed Cuts to Medicare Advantage Would Increase Costs, Decrease Choice for Seniors

3.3 million retirees would pay average of $250 a year in higher costs

• March 9, 2016 4:15 pm


The Centers for Medicare and Medicaid Services have proposed cuts to Medicare Advantage, the private sector part of Medicare, a move that critics say would stick 3.3 million seniors with higher costs and reduced benefits.

The agency announced Monday that it is proposing a cut to Medicare Advantage retiree coverage by 2.5 percent.

"CMS proposed to modify the Employer Group Waiver Plans bidding process to provide these plans with a fair benchmark, reflective of comparable local Medicare Advantage trends and prices," a Centers for Medicare and Medicaid Services spokesperson said. "This proposal addresses the fact that Employer Group Waiver Plans do not compete against other Medicare Advantage plans to serve a particular population."

Critics of the proposal see trouble ahead for retirees who depend on the program.

"This cut will have negative effects on 3.3 million retirees, resulting in higher costs, reduced benefits and fewer choices of providers," said Bruce Josten, the executive vice president of government affairs at the U.S. Chamber of Commerce.

According to a report prepared for the U.S. Chamber of Commerce, the proposed cuts would amount to between $750 million and $870 million in 2017 and force seniors to pay an average of $250 per year in additional health care costs.

"This report demonstrates that the proposed cuts to Medicare Advantage Retiree Coverage could both reduce seniors’ healthcare benefits and hurt their wallets," Josten said.

"The 3.3 million retirees currently enrolled in this program are highly satisfied with the comprehensive and affordable coverage it provides," he said. "Yet, the report’s findings show that these seniors will likely not enjoy the same benefits if the proposed cuts go into effect."

According to one of the report’s lead actuaries, the proposed reductions will have different effects on seniors depending on the type of health care plan they have.

"This analysis is clear that CMS’ proposed reductions to employer group waiver plans will have a negative effect on retirees who rely on this coverage," said Brett Swanson of Milliman, the group that conducted the study. "We know that the impact of these proposed cuts is not the same across the country and will vary depending on the type of plan you have."

Published under: Medicare