Premiums for Medicare Advantage could be jacked up 25 percent next year

It appears that Medicare Advantage premiums will jump an average of 25 percent next year, largely because insurers are canceling many plans that don't require premium payments, officials with CMS say.

The average premium increase should climb to $39 per month, up from about $32 this year, according to the federal agency that manages Medicare. Health plans say that this is resulting from the federal government's plan to cut payments to Medicare Advantage plans by 4.5 percent.

A bigger underlying issue is a 2008 law requiring Medicare plans known as Private Fee for Service plans to establish provider networks. Instead of building the networks, many insurers are opting out of those plans. The health plans' decision will affect more than 667,000 seniors, most of them enrollees of PFFS plans.

President Obama, for his part, argues that Medicare Advantage plans are overpaid generally, and has proposed more than $100 billion in cuts. The Administration is already planning to toughen up oversight of Medicare Advantage. About 400 plans are being eliminated next year to due to lack of enrollees buying into plans with similar features.

To learn more about Medicare Advantage:
- read this Kaiser Health News piece