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Medicare Insurers' Profits Exceed Expectations
This is a condensed version of:
Associated Press Online
Kevin Freking
December 11, 2008
... If the companies had been more accurate, they could have spent much of that $1.3 billion on enhanced health benefits or lower monthly premiums, and they still would have maintained their expected profit margin, the Government Accountability Office said in a report expected to be released Thursday. The GAO studied the Medicare Advantage program for 2006, the most recent year for which figures were available.
Rep. Pete Stark, D-Calif., who requested the analysis, said the government spends more on beneficiaries when they're in Medicare Advantage than if they're in traditional Medicare, about 13 percent more on average. "This puts to bed this idea the plans are offering tremendous extra benefits with the overpayments," said Stark, a frequent critic of the program. "The overpayments are going to profits." The Associated Press obtained a copy of the correspondence from the GAO to Stark. Stark, chairman of the House Ways and Means health subcommittee, said he will push for legislation next year that would lower the government's payments to insurers, an idea that President-elect Barack Obama backed on the campaign trail.
But supporters of the Medicare Advantage program said participants are happy with their benefits, and they note that millions have enrolled in the program in recent years as a result. Any attempts to scale back payments to private insurers would lead to benefit cuts or higher premiums for seniors in those plans, supporters of the program contend.
The GAO said that Medicare Advantage insurers generated $50 billion in revenue during 2006. On average, plans earned profits of 6.6 percent and they had projected to the federal government that they would earn profits of 4.1 percent. The insurance plans also spent less covering medical expenses than anticipated, with 83.3 percent of revenue going to medical expenses. They had projected that nearly 87 percent of revenue would go to expenses.
In responding to the report, federal officials said the insurers' estimates for expenses were within a standard range, given the difficulty in forecasting medical trends and spending. They also stressed that Congress set up the payment structure for Medicare Advantage plans to make sure beneficiaries had wide access to the program.
"The goal of the payment structure, as mandated by Congress, was to ensure broader access to MA plans, particularly for lower-income, minority and rural beneficiaries," said Jeff Nelligan, spokesman for the Centers for Medicare and Medicaid Services.
source: Medicare insurers' profits exceed expectations - Yahoo! News
Medicare Insurers' Profits Exceed Expectations
This is a condensed version of:
Associated Press Online
Kevin Freking
December 11, 2008
... If the companies had been more accurate, they could have spent much of that $1.3 billion on enhanced health benefits or lower monthly premiums, and they still would have maintained their expected profit margin, the Government Accountability Office said in a report expected to be released Thursday. The GAO studied the Medicare Advantage program for 2006, the most recent year for which figures were available.
Rep. Pete Stark, D-Calif., who requested the analysis, said the government spends more on beneficiaries when they're in Medicare Advantage than if they're in traditional Medicare, about 13 percent more on average. "This puts to bed this idea the plans are offering tremendous extra benefits with the overpayments," said Stark, a frequent critic of the program. "The overpayments are going to profits." The Associated Press obtained a copy of the correspondence from the GAO to Stark. Stark, chairman of the House Ways and Means health subcommittee, said he will push for legislation next year that would lower the government's payments to insurers, an idea that President-elect Barack Obama backed on the campaign trail.
But supporters of the Medicare Advantage program said participants are happy with their benefits, and they note that millions have enrolled in the program in recent years as a result. Any attempts to scale back payments to private insurers would lead to benefit cuts or higher premiums for seniors in those plans, supporters of the program contend.
The GAO said that Medicare Advantage insurers generated $50 billion in revenue during 2006. On average, plans earned profits of 6.6 percent and they had projected to the federal government that they would earn profits of 4.1 percent. The insurance plans also spent less covering medical expenses than anticipated, with 83.3 percent of revenue going to medical expenses. They had projected that nearly 87 percent of revenue would go to expenses.
In responding to the report, federal officials said the insurers' estimates for expenses were within a standard range, given the difficulty in forecasting medical trends and spending. They also stressed that Congress set up the payment structure for Medicare Advantage plans to make sure beneficiaries had wide access to the program.
"The goal of the payment structure, as mandated by Congress, was to ensure broader access to MA plans, particularly for lower-income, minority and rural beneficiaries," said Jeff Nelligan, spokesman for the Centers for Medicare and Medicaid Services.
source: Medicare insurers' profits exceed expectations - Yahoo! News
