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34 MILLION SENIORS IN MEDICARE ADVANTAGE PLANS FACE RUDE AWAKENING  
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Emma Curchin
October 15, 2024
CEPR
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_ Insurers are dropping plans and slashing benefits. _

, CEPR

 

October 15 marks the first day of open enrollment in Medicare
Advantage (MA) plans – a time that will deliver chaos and confusion
for many of the 34 million seniors who depend on these plans to pay
their healthcare bills. It’s yet another reminder that Medicare
wastes billions of dollars funneling public money to private companies
that are primarily driven by profit-seeking.

Last year, more MA members than expected used their benefits to get
necessary medical care
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One might assume that companies would expect beneficiaries to use
health care services. But after years of making outsized profits, the
insurance companies that own these plans are reacting to this
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downsizing plans, cutting benefits, increasing copays, and raising
prescription drug deductibles. In other words, Medicare Advantage
beneficiaries are being penalized for using the health care that they
pay for.

Insurers are Dropping Plans and Slashing Benefits

Having spent decades luring enrollees and collecting premiums, two of
the biggest health insurers in the MA marketplace, CVS and
Humana, are scaling back
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slashing benefits, and canceling plans with too many members who used
their health benefits. They are closing less profitable health plans
that serve half a million or more seniors, forcing them to sign up for
other more expensive or less generous coverage. Humana is set to leave
13 markets around the country, affecting 560,000 beneficiaries or 10
percent of its plan members. The reason for exiting? The CFO herself,
Susan Diamond, said the specific markets just aren’t profitable
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CVS Chief Financial Officer Tom Cowhey sent a similar message at a
conference last month: “Could we lose up to 10 percent of our
existing Medicare members next year? That’s entirely possible. And
that’s okay because we need to get this business back on track.”

Medicare Advantage plans are being impacted all over the country.
In Vermont
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MVP and WellCare are dropping two MA plans in January 2025. This will
affect 6,000 older Vermonters who will need to quickly choose new
plans in the upcoming enrollment period. The MA plans cited spiking
health care costs and lower Medicare reimbursements. WellCare, which
is run by Centene Corp, pulled out
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Alabama, Massachusetts, New Hampshire, New Mexico, and Rhode Island in
addition to Vermont, leaving 40,000 people and 4 percent of MA
beneficiaries without continued coverage past the enrollment period.
In New Hampshire
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multiple MA plans are shutting down, leaving tens of thousands
beneficiaries scrambling. In Minnesota
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nearly 60,000 people will face disruptions to their MA plans.

Health systems and hospitals are also making the decision to cancel
contracts due to excessive prior authorization denial rates and slow
payments from insurers. Already 27 health systems have canceled their
Medicare Advantage contracts
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year. MA plans can be especially harmful to rural providers who
already face financial hurdles, and may further
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to continue providing care to their communities due to unreliable and
low reimbursements from insurers.

The MA companies are following a similar strategy when it comes to
prescriptions. To weed out people who require expensive medications,
insurance companies are raising copays on drugs
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hoping members will seek more affordable coverage elsewhere. Roughly
two-thirds of all 34 million Medicare Advantage enrollees are in plans
where the drug deductibles will increase by 167 percent – or at
least $200 next year.

And all of this is in addition to the serious, well-documented
problems with denials of care
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in Medicare Advantage
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beneficiaries have experienced since the program started.

Medicare vs Privatized Medicare Advantage

The purpose of insurance companies running Medicare Advantage plans is
to make money, pure and simple. Seniors across the country rely on
these plans – yet the record shows that insurers don’t value the
quality and affordability of care, and don’t want beneficiaries
to use the medical services they need
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Beneficiaries are tossed aside because they live in an unprofitable
market for their insurer or because they are actually _using_ the
insurance they signed up for to access services.

The purpose [[link removed]] of Medicare is
different: Protecting American seniors by guaranteeing health
coverage. Medicare Advantage funnels taxpayer money to predominantly
large insurance companies like CVS-Aetna and UnitedHealthcare to
manage what healthcare beneficiaries can access. This has cost
significantly more than Traditional Medicare, transferring
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of billions of dollars in overpayments to large corporations who
profit by getting more taxpayer money and spending less on coverage.
Now that beneficiaries want to utilize the care they have been
promised, these insurance giants are choosing to raise healthcare
costs for American seniors.

As we reach the open enrollment period from October 15 to December 7
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beneficiaries should consider signing up for Traditional Medicare to
ensure they get covered for the care they need from the doctors and
hospitals they want to use, without administrative hurdles. In
Traditional Medicare, seniors need not worry about insurance companies
dropping or altering their plans or pushing higher costs on them and
reducing access. Since the government does not require an
out-of-pocket cap in Traditional Medicare – something that is
necessary in MA plans – beneficiaries should consider getting a
supplemental Medigap plan if they can afford it to get true
comprehensive coverage.

In most regions, the companies assure that there will still be
Medicare Advantage plans available from other companies, or the same
company. But what is to say MA plans do not use profit as their north
star once again next year?

When healthcare is a business, regular people lose.

_EMMA CURCHIN is the Domestic Outreach and Research Assistant at the
Center for Economic and Policy Research._

_THE CENTER FOR ECONOMIC AND POLICY RESEARCH (CEPR) was established in
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