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More Than 180,000 Medicare Advantage Members Would Lose Insurance Coverage

Armen Hareyan's picture

Funding cuts to the Medicare Advantage program would cause more than 180,000 people in Michigan with Medicare Advantage plans to lose their coverage.

According to researchers Kenneth Thorpe and Adam Atherly, 24 states including Michigan would lose 50,000 or more enrollees if Congress adopted funding cuts recommended by the Medicare Payment Advisory Commission. Overall, more than 3 million beneficiaries would no longer have Medicare Advantage coverage. The study was commissioned by the Chicago-based Blue Cross and Blue Shield Association.

"This study shows the recommended funding cuts would be devastating to the Medicare Advantage program in Michigan," said Cathy Schmitt, vice president of federal programs for Blue Cross Blue Shield of Michigan. "Total Medicare Advantage enrollment in Michigan would plummet from 196,075 to an estimated 15,644 in 2008 - a 92 percent drop. Members would lose all the benefits they now enjoy under Medicare Advantage: coordinated care, lower cost sharing, benefits not offered under traditional Medicare and enhanced drug coverage."

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The impact of the cuts would be most severe in rural and urban areas where Congress improved payments to ensure Medicare beneficiaries have access to Medicare Advantage plans.

Due to explicit policy decisions by Congress, national enrollment in Medicare Advantage is at an all-time high of more than 8 million people. According to Thorpe and Atherly, Medicare Advantage plans provided more than $5 billion in supplemental benefits in 2006, up from $3 billion in 2005.

The study examines two scenarios: reducing Medicare Advantage benchmarks to county-level fee-for-service claims costs, and freezing Medicare Advantage payments for multiple years. Overall, the study predicts reductions in Medicare Advantage enrollment even larger than those experienced under the Medicare+Choice program. Nearly 2 million people lost coverage following the enactment of the Balanced Budget Act of 1997, which held Medicare+Choice payment increases to 2 percent at a time when medical costs were growing at double-digit rates annually.

Low income and minority populations would be among the hardest-hit groups if funding for Medicare Advantage is cut. According to a 2005 Medicare Current Beneficiary Survey from the Centers for Medicare and Medicaid Services, minorities make up 27 percent of Medicare Advantage enrollment but only 20 percent of traditional Medicare. Therefore, of the 3 million members nationwide that would likely lose Medicare Advantage coverage, about 811,000 would be minority beneficiaries.