Last Friday, a very informative story in The Wall Street Journal reported that Sebelius sent a letter to four MA sellers—but not to United Healthcare or Humana, the companies that sell the most MA plans—warning them not to increase premiums and co-payments for seniors. “Focus on price and quality rather than asking seniors who need health care the most to pay more for it,” she said in her letter. What the heck does she mean by that, when it’s common knowledge that premiums are going up and benefits are going down? To many seniors, the extras MA plans provide are quality, so how is the administration going to square the circle on that one?
I called some consulting actuaries, and one who wouldn’t speak for attribution told me the timing of Sebelius’s letter was curious. “Obnoxious political grandstanding,” he called it. MA sellers were required to file their rate calculations Monday. So if the plans wanted to heed her advice, it was really too late; the plans, especially the big ones, he explained, can’t make changes that quickly. Is that why United and Humana didn’t get Sebelius’s warning letter?
The press needs to have its BS meter ticking as the health care sales job rolls on. A few outlets, like The Hill picked up on what it called “the carefully worded brochure,” but most didn’t explicitly connect the dots. And a segment on the NewsHour the other night left the impression that the public won’t know for several years whether the extra benefits will vanish. This is not the time for media pussy-footing. Seniors need to know that some benefits they’ve come to expect from Medicare Advantage plans will begin to disappear this fall, and they need to think about other options.
The government has frozen what’s known as the benchmark payment rate, the starting point that companies use in their rate calculations. A frozen benchmark leaves little room to accommodate medical costs are increasing about six percent a year. “Some companies will cut some profit, but there is not enough profit to pay for all the extra benefits,” the actuary said. “Seniors will see premiums go up and or benefits go down. This is a financial fact. This is reality.”