Study: Medicare HMOs cost more, not less

In 2003, Congress raised rates to encourage private HMOs to jump into the Medicare program. The idea was that even at higher than they'd budgeted for fee-for-service rates, private HMOs would increase efficiency and lower costs over the long term. Well, a few years later, the evidence suggests otherwise. The move is costing taxpayers $5.2 billion per year, or 12.4 percent more than FFS Medicare, according to a study by the Commonwealth Fund. Right now, the feds pay managed care plans about $800 per beneficiary each month. Patients with FFS Medicare spend $922 less per year, researchers found.

Get more information on this research:
- read this article from United Press International
- review the Commonwealth Fund report (.pdf)