​Medicare Premiums Going Down: How Much Will Seniors Save?

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September 25, 2010

Medicare Premiums

Medicare Premiums Going Down: How much will seniors save? Medicare officials say premiums paid by 11.3 million beneficiaries will drop by 1 percent. The reduction is for people who are enrolled in private Medicare Advantage plans.

The announcement, made by CMS Administrator Donald Berwick, “came as something of a surprise” because some lawmakers and health policy experts had predicted an increase in MA premiums. MA premiums increased by 15% on average in 2009.

Medicare officials said the reform law gave them a stronger stance in negotiations with participating insurers, which they used initially to reject about 300 plans. Berwick said, “These plans unfairly proposed to increase out-of-pocket expenses for beneficiaries while increasing their own profit margins,” adding, “We said, ‘No, you have to do better.’”

Ultimately, the plans in question “improved their benefits by $13 per member per month, or 5 percent, on average” after negotiations, Berwick said. He noted that seven plans did not change their bids and subsequently were denied.

John Gorman, CEO of consulting firm Gorman Health Group, said officials gave insurers “a beat-down” during negotiations. He said, “This was night-and-day different from the Bush years,” Gorman added, “Insurers succumbed to the government’s demands and stayed in the Medicare market because they have become much more dependent on Medicare business.”