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Medicare Advantage Enrollment Expected to Rise

Not too long ago, the American public was warned to expect a decrease in Medicare enrollment.  However, the Congressional Budget Office (CBO)  reported in Bloomberg News that Medicare Advantage enrollment is actually expecting a fifty percent (50%) increase in the next decade:  “Medicare Advantage plans, which offer added benefits over traditional Medicare such as lower out-of-pocket spending, may be able to increase those benefits as costs slow.”

“(A) recent slowdown in health-care cost growth may be permanent, said Joseph Antos, a health economist at the American Enterprise Institute in Washington who has advised the CBO in the past.”

“The Standard & Poor’s 500 Managed Care Index has jumped 19 percent this year, edging out gains of the broader S&P 500, as government policies on Medicare and on implementation of the 2010 health-care system overhaul turn out to be more favorable to insurers than some investors had anticipated.”

“U.S. health-care costs grew at an average annual rate of about 3 percent from 2009 to 2011, measured on a per capita basis, according to the Centers for Medicare and Medicaid Services. That’s less than half the rate in 2007, and a third of the rate in 1990. Economists are debating whether the slowdown in spending is mostly an outgrowth of the recession of 2008-2009 or if more permanent changes, including efficiency and care improvements at hospitals, have played a large role. A policy change in April by the Obama administration may also have influenced the CBO’s projections, Antos said. The administration backtracked on a proposed 2.2 percent cut in payments to Advantage plans that was based on an assumed reduction in doctor compensation. The rate will now rise 3.3 percent next fiscal year. The Advantage program ‘has proven too important to undermine and we expect the Center for Medicare and Medicaid Services, along with stakeholders, to eventually identify an appropriate level of funding to support sustainable membership growth,” said Jennifer Lynch, a BMO Capital Markets analyst in New York.

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