Medicare Advantage rundown: 4 market and cost trends to watch

The Kaiser Family Foundation recently released its 2014 Medicare Advantage Data Spotlight, which paints a wide-angle picture of the Medicare Advantage landscape facing payers and beneficiaries next year.     

Trend 1: Plan availability shifts

Next year will see fewer Medicare Advantage plans available for individual enrollment. Although 289 new plans will debut, 349 have been canceled. Consequently, 5 percent of enrollees will need to replace current coverage or return to traditional Medicare plans, which have worse health outcomes than Medicare Advantage plans, per a May study by the Boston Consulting Group. Most beneficiaries "should have little problem finding a substitute plan with similar characteristics, often from the same company," Kaiser concluded. 

There also will be 84 fewer Special Needs Plans (SNP) in 2014. At least one SNP will still be available in all states but eight: Arkansas, Maine, Montana, New Hampshire, North Dakota, South Dakota, Vermont and Wyoming. And SNPs will be most plentiful in highly-populated areas including California, Florida, New York and Texas.    

Trend 2: Large-payer market control

An exodus of insurers from Medicare Advantage will leave the lion's share of enrollments to Blue Cross Blue Shield, Humana and United Healthcare. This prompted Kaiser to conclude "the dominance of a few large firms in the Medicare Advantage marketplace probably warrants ongoing monitoring to ensure that such concentration does not limit competition, particularly on value and quality of care."

Trend 3: Changes in premiums and out-of-pocket maximums   

People in the same plan next year may face modest premium hikes; however, in private fee-for-service plans, average premiums will fall by $13.  

Average out-of-pocket spending limits will likely rise by more than $600. This may be due to government funding cuts, which are draining dollars from Medicare Advantage to finance healthcare reform. Forty-one percent of plans have maximums of $5,000 or more, including 38 percent of HMOs, 45 percent of local PPOs and 90 percent of regional PPOs.

Trend 4: Donut-hole drug benefits and Part D inertia          

The report showed 50 percent of plans including prescription drug coverage will provide some benefits through the coverage gap in 2014, as compared to 17 percent of freestanding prescription drug plans.

And though people who compare plans may reduce out-of-pocket costs in exchange for a few trade-offs, "a growing body of evidence suggests a high level of inertia, with few beneficiaries in Part D switching plans from one year to the next," Kaiser noted. This aligns with a study of Medicare-eligible Americans earlier this month that found 10 percent of respondents wanted someone else to shop for health insurance on their behalf.

For more:
- read the Kaiser Foundation issue brief

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