Blues and Medicare: Assure the Stability of Medicare Advantage and Part D Programs that are providing Improved Benefits and Reduced Costs for Beneficiaries


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November 7, 2006


Issue: Approximately 6 million people with Medicare are enrolled in Medicare Advantage (MA) plans and more than 24 million now have prescription drug coverage through MA plans, stand-alone prescription drug plans and employer and union plans. The 2003 Medicare Modernization Act (MMA) reversed years of chronic underfunding of the MA program and introduced new Medicare options. Congress is now considering changing the rules and funding for these options before many MMA-related changes are fully implemented.

Position: Blue Cross and Blue Shield Plans urge Congress to maintain the stability of the Medicare Advantage and Part D programs. The future of private plan choices in Medicare depends on maintaining stable rules and reliable funding. Changing the rules would:

  • Threaten expanded choices for people with Medicare;
  • Destabilize the program and lead health plans to reconsider participation; and
  • Harm enhanced coverage for low-income and other vulnerable populations.

Changes Would Undermine Expanded Choices for People with Medicare

  • Beneficiaries are seeing expanded MA and prescription drug plan choices. According to the Centers for Medicare and Medicaid Services (CMS), over 90 percent of Medicare beneficiaries had access to MA plan options by the end of 2005. Medicare beneficiaries have access to a Blue Cross and Blue Shield local or regional MA product in 34 states. Blue Plans now provide stand-alone prescription drug plans in 41 states.

  • Beneficiaries are seeing improved benefits/lower cost-sharing. More than 80 percent of MA enrollees have seen their benefits increase, 41 percent have seen their premiums decrease, and 43 percent have seen a reduction in their co-payments or other cost sharing since March 1, 2004, when the new MMA funding was implemented.

  • Beneficiaries in Part D are seeing significant savings. Beneficiaries enrolling in Medicare Prescription drug plans can expect to see savings of 34 to 41 percent on their prescription drugs, and those with limited incomes will save significantly more. According to CMS, average monthly premiums are around $25, one-third lower than previous projections.

Changes Could Destabilize the Program and Lead Health Plans to Reconsider Participation

  • The future of private plan choices depends on maintaining reliable funding. MMA payment reforms reversed years of chronic underfunding that forced MA plans to leave the program. MA options declined from 346 in 1998 to 151 in 2003 because of underfunding. MMA payment increases reversed this trend, and the number of MA plans has nearly tripled, providing coverage to 6 million Medicare beneficiaries. Reducing MA or Part D funding would signal that the government is an unreliable business partner and would once again threaten access and choice for Medicare beneficiaries.

  • It is premature for Congress to make changes to the Part D program, which is still in the implementation phase. Millions of seniors and people with disabilities now have access to prescription drug coverage under Medicare Part D. While some transition issues were bound to arise in implementing this massive new benefit, CMS, plans and pharmacists are identifying and fixing problems, and conditions are improving day by day. Congress should allow these issues to be resolved through administrative action before changing the rules for this program through legislation.

Changes Would Harm Enhanced Coverage for Low-Income and Other Vulnerable Populations

  • MA plans offer beneficiaries lower overall out-of-pocket costs. In May 2004, a CMS study indicated that out-of-pocket costs for MA enrollees were 34 percent lower than for beneficiaries who have traditional, fee-for-service Medicare coverage. An updated CMS analysis released in April 2005 estimated that beneficiaries in MA plans are expected to save almost $100 a month or $1,200 a year compared to the out-of-pocket costs beneficiaries face in FFS Medicare.

  • Low-income and minority beneficiaries would be hardest hit by Medicare Advantage funding cuts. Historically, low-income and minority beneficiaries have turned to MA for a safety net from high out-of-pocket costs. A study by Ken Thorpe, Ph.D., of Emory University shows that beneficiaries who are low-income, African American, or Hispanic are disproportionately enrolled in MA and would not have access to important benefits and financial protections if MA options were no longer available to them.

We urge sustained MA and Part D funding, as provided in the MMA, to provide meaningful health plan choices for all beneficiaries through continued private Plan participation in MA. The Blue Cross and Blue Shield Association is made up of 39 independent, locally operated Blue Cross and Blue Shield companies that collectively provide healthcare coverage for more than 100 million - nearly one-in-three - Americans.


 



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