Medigaps Going Up. What Happens to MA Premium?

[Fisher]

Fisher no need to get hostile. You had that little adrenaline tingle in your chest when you wrote that didnt you. This is an forum to exchange thoughts, ideas and opinions. I had my deductibles mixed up from 08-09-10, I stand corrected, no big deal. If all you have to share is negativity then im done with this conversation.

Now back to the point at hand. I dont think there are many people that would argue the fact that increasing medicare deductibles have a direct effect on the average cost of a medicare supplement. Do you disagree? I also doubt that anyone would disagree that a trend increase for new business is based on different factors than an inforce business rate increase.

No hostility here, my friend, not sure where you came up with that. Saying no big deal to inaccurate information is, to me, a big deal.

 

[jdeasy]

Recently several Medicare supplement carriers have announced price increases. Generally, around 10%. It seems everyone expected this increase.

That being the case, why is there no effect on Medicare advantage plans? There are still carriers offering zero premium plans and throwing in the drug plan along with health club memberships and other stuff.

How can all advantage plans afford this? I don't get the math. If premiums for Medicare supplement are increasing due to loss experience how do the Medicare Advantage plans escape this?

They are different things. MA plans do have price increases or benefit reductions or both.

The MA carriers are paid directly by CMS, {indirectly by you and I}, to provide the medicare coverage for the individual. It's called the capitation rate. It's around $10,000 per participant. The company gets that money plus any premium there may be and then provides the services. If they can provide the services for less than that, it's profit. If they can't, they cry and moan for more money and they usually get it. MA plans cost the taxpayers about 15% more than original medicare.

 

[azmedsupagent]

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They are different things. MA plans do have price increases or benefit reductions or both.

The MA carriers are paid directly by CMS, {indirectly by you and I}, to provide the medicare coverage for the individual. It's called the capitation rate. It's around $10,000 per participant. The company gets that money plus any premium there may be and then provides the services. If they can provide the services for less than that, it's profit. If they can't, they cry and moan for more money and they usually get it. MA plans cost the taxpayers about 15% more than original medicare.

Yup... Correct me if Im wrong but arent the capitations based on some sort of bidding system? I read that some where a few years ago...

 

[Josh]

The MA carriers are paid directly by CMS, {indirectly by you and I}, to provide the medicare coverage for the individual. It's called the capitation rate. It's around $10,000 per participant. The company gets that money plus any premium there may be and then provides the services. If they can provide the services for less than that, it's profit. If they can't, they cry and moan for more money and they usually get it. MA plans cost the taxpayers about 15% more than original medicare.

One interesting thing I would add is that MA carriers can't legally make more than 5% off of their plans and rarely is that even an issue. What really should be happening, and the drum I've been beating for a little while, is that the plans should be administering a standardized Medicare benefit and earn contracts by demonstrating their ability to reduce fraud, waste, and abuse as well as provide quality care. The real problem with the way MA is sucking off the american milk bag has less to do with the 15% more number and infinitely more to do with the fact that there are folks that rarely go to the doc, they pick up an MA plan and then the government is paying a minimum of around $800/month for a member they were paying quite possibly nothing for. Employers with as few as 500 employees are paying third party administrators to admin major medical and self insuring because they save money, what the hell do we think could be saved if the government did that with 43 million members. It's nuckin futs!
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Yup... Correct me if Im wrong but arent the capitations based on some sort of bidding system? I read that some where a few years ago...

Not really. They have to be approved, but the reimbursement rates are all the same from carrier to carrier, they're not competing for the business on price.

 

[azmedsupagent]

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One interesting thing I would add is that MA carriers can't legally make more than 5% off of their plans and rarely is that even an issue. What really should be happening, and the drum I've been beating for a little while, is that the plans should be administering a standardized Medicare benefit and earn contracts by demonstrating their ability to reduce fraud, waste, and abuse as well as provide quality care. The real problem with the way MA is sucking off the american milk bag has less to do with the 15% more number and infinitely more to do with the fact that there are folks that rarely go to the doc, they pick up an MA plan and then the government is paying a minimum of around $800/month for a member they were paying quite possibly nothing for. Employers with as few as 500 employees are paying third party administrators to admin major medical and self insuring because they save money, what the hell do we think could be saved if the government did that with 43 million members. It's nuckin futs!

Good point. If advantage plans had a standard set of benefits the program would be far more efficient than it currently is and it sure would make navigating the plans a whole lot easier...

 

[Josh]

MA plans are heavily subsidized by our tax dollars. This could drastically change for 01/2012, so much so that MA plans could be history in a few years, due to Obamacrap.

Yes and no.

Medicare and SS are a Ponzi scheme to begin with. Yes our tax dollars are going into it, but technically theirs went to pay for those before them, so in all fairness they "deserve" them. Second, they're not heavily subsidized by Medicare, they're virtually completely funded by Medicare. Most plans are $0/month, some even have premium buy back which lowers their part b premium.

"This could drastically change for 01/2012" is sort of late in the game. This has been a concern for years and in 2008 MIPPA was passed which made it absolutely clear there were going to be drastic changes. It's not a "could" or a maybe, it became a guarantee. This healthcare reform bill, PPACA, only further adds to what was already going to happen. Going back in time even further, back in 2003 the MMA was passed which was the relevant bill to create the part D mess which also helped ensure funding for MA plans. No one expected that to last, but the shoe dropped almost three years ago, not last year.

MA plans have had issues in the past, the odds of them completely fading away are minimal, but the odds of anyone being able to make a living selling them are almost as low. It's tough now and will only get worse as carriers continue to pull out of the industry, continue to offer less and less competitive plans, and Medicare supplements are being updated to meet the needs of seniors better.

 

[jdeasy]

One interesting thing I would add is that MA carriers can't legally make more than 5% off of their plans and rarely is that even an issue. What really should be happening, and the drum I've been beating for a little while, is that the plans should be administering a standardized Medicare benefit and earn contracts by demonstrating their ability to reduce fraud, waste, and abuse as well as provide quality care. The real problem with the way MA is sucking off the american milk bag has less to do with the 15% more number and infinitely more to do with the fact that there are folks that rarely go to the doc, they pick up an MA plan and then the government is paying a minimum of around $800/month for a member they were paying quite possibly nothing for. Employers with as few as 500 employees are paying third party administrators to admin major medical and self insuring because they save money, what the hell do we think could be saved if the government did that with 43 million members. It's nuckin futs!
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Not really. They have to be approved, but the reimbursement rates are all the same from carrier to carrier, they're not competing for the business on price.

I certainly over simplified my answer, but the point was that MA plans vs med sups is comparing apples and oranges.

 

[Josh]

Good point. If advantage plans had a standard set of benefits the program would be far more efficient than it currently is and it sure would make navigating the plans a whole lot easier...

Let me start with a big fat HELL NO, THAT'S NOT WHAT I SAID!!!

I want the entire payment structure gutted. No more $800+/month/member, maybe a $50pmpm to admin a plan, but all they're doing is paying the claims, tracking fraud, and maintaing cost effective provider networks like an ASO does. The actual claims would be paid out of the Medicare fund, the same fund that Original Medicare claims get paid out of. Well maybe not technically the same fund, but conceptually the same fund. The carriers can do a better job administering a plan than the government can, so why not pay them to administer the plan while assuming no risk rather than continually overpaying them to assume risk the government already has.

 

[azmedsupagent]

One interesting thing I would add is that MA carriers can't legally make more than 5% off of their plans and rarely is that even an issue. What really should be happening, and the drum I've been beating for a little while, is that the plans should be administering a standardized Medicare benefit and earn contracts by demonstrating their ability to reduce fraud, waste, and abuse as well as provide quality care. The real problem with the way MA is sucking off the american milk bag has less to do with the 15% more number and infinitely more to do with the fact that there are folks that rarely go to the doc, they pick up an MA plan and then the government is paying a minimum of around $800/month for a member they were paying quite possibly nothing for. Employers with as few as 500 employees are paying third party administrators to admin major medical and self insuring because they save money, what the hell do we think could be saved if the government did that with 43 million members. It's nuckin futs!
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Not really. They have to be approved, but the reimbursement rates are all the same from carrier to carrier, they're not competing for the business on price.

Here is what I was talking about. I guess its just the "rebate" thats based on a bid above or below a benchmark. First page second paragraph.
http://www.cbo.gov/ftpdocs/113xx/doc11355/MAComparisons.pdf

 

[Josh]

I certainly over simplified my answer, but the point was that MA plans vs med sups is comparing apples and oranges.

Oh, and I completely agree with you and as completely respect you. I just wanted to take the opportunity to get on my soap box and rant about the way I think things should be run in the MA world.

If they let plans ASO Medicare Advantage plans, I'd have no problem with continuous open enrollment too
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Here is what I was talking about. I guess its just the "rebate" thats based on a bid above or below a benchmark. First page second paragraph.
http://www.cbo.gov/ftpdocs/113xx/doc11355/MAComparisons.pdf

Yeah, it is bidding, but not the way you'd think. It's bidding, but it's not like bidding for a government contract to provide goods and/or services to the government and the lowest bid gets the deal, it's bidding to see if you'll get the contract to be able to sell your services, but everyone can "win" the bid. More like everyone is bidding to be able to bring their hot dog stand to the national mall and anyone that meets the guidelines can come vs businesses competing to be the sole hot dog vendor.