POSTED: Tuesday, April 2, 2013 - 12:00am
UPDATED: Tuesday, April 2, 2013 - 12:14am
(CNN) — Millions of Americans who get their health insurance through the Medicare Advantage plan could soon be paying more for coverage, according to an announcement expected Monday.
The Centers for Medicare and Medicaid Services (CMS) will announce on Monday the final Medicare Advantage rates for 2014, which are expected to be cut, saving the government money -- but potentially costing the public more.
CMS had initially proposed a 2.3% reduction in what the government pays the insurance companies that provide the plans. Upset by that scenario, the insurance companies have spent the public comment period time lobbying legislators and running ads against the cut.
Ads from the America's Health Insurance Plans' Coalition for Medicare Choices called the proposal "drastic" and "too much" and featured seniors saying they can't afford to pay more for health care.
About 25% of the 47 million Americans on Medicare pay more to have Medicare Advantage. The plans are run by private insurance companies that are reimbursed by the government for doing so.
The plans vary, but they offer the elderly more than they would get with regular Medicare. Most plans offer prescription drug coverage; some also offer dental and vision. All the plans cap a person's out-of-pocket expenses, while regular Medicare does not.
The rate reduction, which is a part of the Obama administration's ongoing effort to save money on the program, comes at an unfortunate time, according to Emory University health care economist Ken Thorpe.
"The problem is, this payment reduction comes on top of others that all go into effect at about the same time, so this becomes an usually large reduction," he said.
These separate payment reductions mean insurance companies that offer Medicare Advantage plans will receive about 8% less from the government. "The insurance companies are getting it from all angles, which means seniors could eventually pay more for those plans and the plans may not be as attractive an option any more," Thorpe said.
Another health care economist, Gretchen Jacobson, who works with the Kaiser Family Foundation, will be watching the CMS news closely.
"All these payment reductions coming at once do make for a perfect storm, so it will be interesting to see what impact the CMS announcement will have on these programs," she said. "You could see a situation where companies may want out of the Medicare Advantage insurance business in some regions."
Seniors won't know what the out-of-pocket costs these cuts will bring until the fall. That's when the insurance companies put in their bids for the government work. By law, those out-of-pocket expenses can't go up by more than $30 more per month. That doesn't sound like a lot, but it can add up for seniors on a fixed income.
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