UnitedHealth, Humana To Increase Enrollment In Medicare Advantage Plans

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Medicare Advantage Plans

UnitedHealth Group, the largest U.S. healthinsurer, and Humana, the fourth-largest health insurer, have"bet heavily on the federal Medicare program" as "sales slump inthe private-sector parts of their business," the NewYork Timesreports. According to the Times, the "biggest gamble" onthe "Medicare limb" is Medicare Advantage, in which health insurersmanage physician networks. One in five of the 43 million Medicare beneficiariesis enrolled in a private MA plan, but the program has "become a politicaltarget" because reimbursements for the plans are 12% higher than paymentsunder the fee-for-service program for equivalent benefits, the Timesreports. Reimbursements for MA plans will reach an estimated $100 billion by2009 without changes to the program.

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The Bush administration has said that MA plans improve choice and benefits forMedicare beneficiaries, but some lawmakers maintain that the program benefitshealth insurers and have sought to reduce reimbursements for the plans. Manylarge health insurers are "reluctant to seek growth" in the Medicarebusiness, which is "subject to changes in federal payments andprocedures," but UnitedHealth and Humana "seem undeterred,"according to the Times.

UnitedHealth, which has 1.3 million members enrolled in MA plans, hopes toincrease enrollment through a plan marketed with AARP, andHumana, which has 1.1 million members enrolled in MA plans, hopes to increaseenrollment by at least 200,000 this year. Medicare business this year willaccount for about 15% of pretax earnings for UnitedHealth and for about 75% ofpretax earnings for Humana. In contrast, Medicare business this year willaccount for no more than 5% of earnings for WellPoint, Aetna and Cigna (Freudenheim, New York Times, 12/5).

Reprintedwith permission from kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign upfor email delivery at kaisernetwork.org/email . The Kaiser Daily Health PolicyReport is published for kaisernetwork.org, a free service of The Henry J.Kaiser Family Foundation.

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