What President Obama's Nationwide Medicare Advantage Capitation Cuts Mean for Beneficiaries

As indicated in earlier post, preliminary indications signal that the nationwide capitation cuts to the Part C Medicare health plan program (most of these plans are called Medicare Advantage) announced by the Obama administration in April 2014 will lead to major changes for beneficiaries in 2015. As the earlier post noted Part C plans have already been cut or changed in major ways in Georgia, upstate New York and Northern New England.

As of September 17 according to Daily Kos -- of all places -- there are also major changes to Part C in North Carolina.

To get technical about it, the process for calculating the 2015 "capitation rate" was changed from previous years so that it looks like all beneficiaries in all United States counties on Part C will get less premium support than in 2014. This is not your typical government "savings" which usually is code for less than we expected to spend. I mean absolutely less.

The fact that the capitation rate that the Part C beneficiary gets from the Medicare bureaucracy is lower means that -- all other things being equal -- premiums will be higher proportionately. But all other things are never equal.  

• Other budget cuts baked into the Patient Protection and Affordable Care Act (better known as Obamacare) will  raise premiums even more than that. 
• A special (allegedly illegal¹) bonus program that held down your Part C plan's premium in 2013 and 2014 has ended.
• Other federal-government budget cuts (so-called sequestration) will work to raise premiums a little more.
• Or instead of raising premiums, administrators could increase co-pays or annual out of pocket spending limits or reduce benefits (but not below what traditional fee for service Medicare covers) 

On the other hand, the continued increasing popularity of public Part C Medicare health plans (up from 2% of those eligible when the program started to 30% in 2014) might stablize things a little because there are more people "in the pool."

On the other hand county by county changes may raise or lower premiums or eliminate your Part C plan altogether as happened in Worcester Country, Massachusetts for 5000 Tufts customers in 2013 no matter what happens nationally.