Medicare Advantage Premiums May Increase 14 Percent

A new study reports that premiums for Medicare Advantage plans offering medical and prescription drug coverage jumped 14.2 percent on average in 2010, after an increase of 5.2 percent the previous year.

According to experts, some 8.5 million elderly and disabled Americans participate in Medicare Advantage health plans, that provide more comprehensive coverage than traditional Medicare.  The study, done by Avalere Health, a data analysis firm, reported that the average monthly Medicare Advantage premium for 2010 is $39.61, representing an increase of nearly $5 a month from the previous year. That compares with a rise of less than $1.75 a month in 2009.

In a second report it was announced that Medicare may cut of as much as 4 percent in government payments to U.S. health insurers for policies serving the elderly.  This ould significantly threaten profit growth at UnitedHealth Group Inc., Humana Inc. and HealthSpring Inc.

The agency in charge of Medicare is due to announce preliminary rates today for insurers offering so-called Medicare Advantage plans in 2011.   The preliminary rates, to be made final in April, are based on Medicare’s projections of where costs will go in the coming year, adjustments for how doctors’ fees are expected to change, and the relative sickness of beneficiaries.

“Government programs can not continue to provide benefits to millions of Americans when tax and income revenues are significantly lower than projected,” explains Jesse Slome, executive director of the American Association for Long-Term Care Insurance.   ”What most amazing is that at the same time as seniors are going to face significant cost increases a new entitlement program providing long-term care benefits for consumers is being considered.”

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