Medicare chief says healthcare law strengthened program

The healthcare law has strengthened the privately-run Medicare Advantage program, Medicare’s chief testified Thursday. 

Medicare Administrator Donald Berwick said premium costs to seniors under the program, which provides extra benefits such as vision and dental to more than 11 million people, are down six percent this year. He also said enrollment has surged by 6 percent. 

“Despite earlier projections of enrollment declines and premium increases,” Berwick testified, “the actual data we now have in 2011 shows that enrollment in Medicare Advantage increased 6 percent, to more than 12 million beneficiaries.” 

Berwick’s testimony during a Ways and Means hearing on Medicare’s future blunts Republican criticism that the healthcare reform law’s billions of cuts to the program would cause a massive upheaval. During the healthcare debate, Republicans said the new law would gut the program, which covers about a quarter of all Medicare beneficiaries. 

“On average, beneficiaries have seen a 6 percent reduction in their premiums, and there is a 5 percent increase in the number of beneficiaries who are now in four- and five-star Medicare Advantage contracts this year versus last year,” Berwick said. “That translates into more beneficiaries being in lower-cost and higher-quality plans.”

The new numbers contrasted with the Centers for Medicare and Medicaid Services’ (CMS) actuary prediction that Medicare Advantage enrollment would eventually drop by 7.4 million individuals, and that the enrollment dip would be seen this year. Pressed by House Republicans, Berwick said the actuary’s prediction was incorrect.

“I have the facts on the ground before me now,” Berwick said. “The facts are that Medicare Advantage is looking stronger and stronger.”

The insurance industry trade group America’s Health Insurance Plans, however, submitted written testimony warning of future disruptions. AHIP points out that the healthcare reform law froze MA rates for 2011, with more than $200 billion in cuts — $136 billion in direct cuts and another $70 billion in reimbursement changes — coming over the next decade.

“In future years, however, beneficiaries likely will begin to see the impact of the ACA funding cuts, since the cuts become increasingly larger with each passing year,” AHIP wrote. “CBO’s estimates show that the Medicare Advantage cuts for 2012 ($6 billion), 2013 ($9.4 billion) and 2014 ($13.1 billion) are many times larger than the cuts for 2011 ($1.8 billion). As the cuts become deeper in 2012 and beyond, plan sponsors will be challenged in their efforts to cushion the blow for beneficiaries.”

AHIP spokesman Robert Zirkelbach added that some of the decrease in premiums comes from seniors shifting from higher-premium Fee-for-Service plans to lower-premium network-based plans due to earlier legislation.

For its part, CMS says that seniors are seeing other benefits in addition to the lower premiums. For example, the annual value of MA’s extra benefits has grown from $972 in 2010 to $984 in 2011, according to a CMS document obtained by The Hill.

“In total,” the document says, “the Administration negotiated $150 million in reduced beneficiary premiums and cost sharing with Medicare Advantage insurers last year using new authorities granted by the Affordable Care Act. These types of reductions in cost sharing help ensure that our sickest or frailest beneficiaries with Medicare Advantage can access needed medical care such as skilled nursing care, chemotherapy and renal dialysis without unaffordable out-of-pocket costs.”

This post was updated at 12:59 p.m.

Jason Millman contributed to this article.