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Analysis

Premiums for Medicare Advantage Expected to Drop 23% for 2020

By John Commins  
   September 25, 2019

HHS says MA plan options, benefits, and enrollment are expected in increase in the coming year.

With Medicare's open enrollment period looming on October 15, the Centers for Medicare & Medicaid Services announced this week that Medicare Advantage premiums for 2020 will drop by an average of 23% when compared with premiums in 2018.

Since 2017, the average monthly Medicare Advantage premium has fallen by 27.9%, and the 2020 estimates represent the lowest average monthly premium for a Medicare Advantage plan has been since 2007, CMS said. 

In addition, Health and Human Services Secretary Alex Azar said the 24 million people who are projected to enroll in Medicare advantage will have more plans and benefits to choose from.

"That is what CMS has been delivering with its improvements to Medicare Advantage: lower costs, more options, and benefits tailored to patients' needs," Azar said in a media release.

"This proven record of success—decreasing premiums in both Medicare Advantage and Medicare Part D—contrasts with proposals for a total government takeover of healthcare, which would destroy options such as Medicare Advantage that seniors increasingly choose," he said.  

Medicare Advantage enrollment has increased by more than 30% since 2017. CMS projects that Medicare Advantage enrollment, currently at 22.2 million, will increase to 24.4 million in 2020, representing about one third of the 60 million people in the Medicare program.  

CMS Administrator Seema Verma used the announcement to take a swipe at Medicare For All proposals touted by some Democratic presidential candidates.

"On the contrast, proposals for more government through Medicare for All or a public option, would only harm the progress we have made to protect and strengthen the Medicare program for future generations," Verma said.

Along with a previously announced 13.5% decline in the average monthly basic Part D premium, Verma said beneficiaries have saved about $2.65 billion in Medicare Advantage and Part D premium costs since 2017.

Critics of MA say it actually costs the federal government more money because MA enrollees generally are healthier, use fewer healthcare services, and would accrue lower costs for the program if they were enrolled in traditional Medicare.'

Katherine Holt, associate director of the Center for Medicare Advocacy, says that MA plans have been able to lower premiums by narrowing provider networks, and "aggressively managing care through difficult prior authorization requirements."

Holt says the Trump administration is "engaged in a concerted effort to steer beneficiaries to Medicare Advantage, whether or not a private plan is the right choice for their coverage needs."

"More choices are not necessarily better choices," Holt says. "Beneficiaries should carefully weigh the value of Medicare Advantage plan extra benefits against the need for significant access to medical services as available in Original Medicare."

The projected average monthly basic Part D premium of $30 in 2020 is the lowest the Part D basic premium has been since 2013.    

According to CMS:

  • MA average monthly premiums are expected to drop 14% to $23 in 2020, down from $26.87 in 2019.
     
  • Beneficiaries will have about 1,200 new MA plans operating in 2020 than in 2018.
     
  • The average number of MA plan choices per county will increase from about 33 plans in 2019 to 39 plans in 2020. This represents an increase of 49% since 2017.
     
  • The continued decline in Medicare Advantage and Part D premiums over the past three years is estimated to save taxpayers nearly $6 billion in the form of lower Medicare premium subsidies.   

America's Health Insurance Plans said beneficiaries are flocking to MA "because it delivers better services, better care and better value than traditional Medicare."

"Medicare Advantage continues to outperform and offer better coverage and care than traditional Medicare, even though the average payment to MA plans is equivalent to costs for traditional Medicare, AHIP said.

“Proposals for more government through Medicare for All or a public option, would only harm the progress we have made to protect and strengthen the Medicare program for future generations.”

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

Since 2017, the average monthly Medicare Advantage premium has fallen by 27.9%, and the 2020 estimates represent the lowest average monthly premium for a Medicare Advantage plan has been since 2007,

CMS projects that Medicare Advantage enrollment, currently at 22.2 million, will increase to 24.4 million in 2020, representing about one third of the 60 million people in the Medicare program.


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