May Oppenheimer Report Confirms Individual Medicare Advantage Plan Enrollment Continues Growth Post Reform

June 1, 2010

At Extend Health, we continue to be encouraged that the future for Medicare Advantage in a post reform world still looks robust. The latest good news comes from Oppenheimer, in a recent report titled Prosperity Makes Friends; Adversity Tries Them: May Medicare Enrollment

According to the report, profits for many MA plans were better than expected in 2009, and the earnings picture looks rosy for 2010 as well. Profits have been rising on healthy growth in membership numbers, and MA plans actually added more new enrollees in May 2010 than they did in May 2009.

Oppenheimer notes that “…Medicare plans appear to have a more certain near-term outlook than the commercial plans right now, as Medicare rates for the next year are known, the long-term reimbursement outlook was determined as part of reform, and the membership continues to show surprising resilience despite major benefit adjustments and higher premiums.” [Emphasis mine]

That member resilience can be expected to continue. Premium increases are nothing new (averaging 14%  this year, before reform was passed). When enrollees evaluate their choices, in most cases they’ll discover that their MA plan is still more cost-effective than other options.

We’ve noted before (here and here) that we expect carriers to react in a stable, rational manner to reimbursement reductions. The carriers we talk to are already well along in implementing strategies to raise their CMS-determined “star” ratings so they can capture some of the bonus money available for four- and five-star rated plans.  With payment rates staying flat in 2011 (rather than being cut by 4% as was expected), insurers will continue to adjust strategy, benefit design, and premiums to handle  the coming reductions without breaking the bank for their MA plan members.

For more on our take on the future of Medicare Advantage plans, and how we are advising our corporate clients to manage through this transitional time, listen to the replay of this webinar on healthcare reform and your retirees that we presented in April. (Just click on the link under the webinar tab.)

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