Press Release
Researchers Ken Thorpe and Adam Atherly Find Three Million Beneficiaries Would Lose Coverage If Medicare Advantage Funding Is Cut
WASHINGTON, April 25, 2007 — A new study released today by the Blue Cross and Blue Shield Association (BCBSA) shows that funding cuts to the Medicare Advantage (MA) program could cause more than 3 million people - roughly one-third of all MA beneficiaries - to lose their coverage. Many of these individuals are low-income and minority beneficiaries.
According to researchers Kenneth Thorpe, Ph.D., and Adam Atherly, Ph.D., of Emory University, half of all states would lose more than 50,000 enrollees if Congress adopted funding cuts recommended by the Medicare Payment Advisory Commission. Beneficiaries in Ohio and Pennsylvania would be hardest hit, with approximately 196,000 people in each state losing coverage. Michigan and Texas also would face dramatic reductions - 180,000 and 173,000 beneficiaries, respectively, would no longer have MA coverage.
"This new research shows what we have known all along - funding cuts would have direct, devastating consequences for beneficiaries enrolled in Medicare Advantage," said Scott P. Serota, BCBSA president and CEO. "Thanks to explicit policy decisions by Congress, enrollment in Medicare Advantage is at an all time high - more than 8 million people rely on this program for coordinated care, lower cost sharing, benefits not offered under traditional Medicare, and enhanced drug coverage. Congress should not take any action that would jeopardize care for the millions of people who are overwhelmingly satisfied with their Medicare Advantage coverage."
The impact of these cuts would be most severe in rural and urban areas where Congress improved payments to assure that Medicare beneficiaries have access to Medicare Advantage plans. According to Thorpe and Atherly, MA plans provided more than $5 billion in supplemental benefits in 2006, up from $3 billion in 2005.
The study examines two scenarios: (1) reducing MA benchmarks to county- level fee-for-service (FFS) claims costs; and (2) freezing MA payments for multiple years. Overall, the study predicts reductions in MA enrollment that are even larger than those experienced under the Medicare+Choice program. Nearly 2 million people lost coverage following the enactment of the Balanced Budget Act of 1997, which held Medicare+Choice payment increases to 2 percent at a time when medical costs were growing at double-digit rates annually.
Low-income and minority populations would be among the hardest hit groups if funding for MA is cut. According to a 2005 Medicare Current Beneficiary Survey from the Centers for Medicare & Medicaid Services (CMS), minorities make up 27 percent of MA enrollment but only 20 percent of traditional Medicare. Therefore, of the 3 million MA members that would likely lose Medicare Advantage coverage, about 811,000 would be minority beneficiaries.
Also, according to the CMS survey, beneficiaries earning between $10,000 and $30,000 annually represent 57 percent of MA enrollees but only 46 percent of FFS Medicare. Of the 3 million who would lose MA coverage, an estimated 1.7 million would have incomes between $10,000 and $30,000 annually.
"Congress made the right decision to invest in Medicare Advantage to expand access and avoid the failures of the Medicare+Choice program. Unfortunately, proposed funding cuts to Medicare Advantage would cause millions to lose coverage, a far more disastrous situation than what was experienced by the failure of Medicare+Choice," Serota said. "Our seniors deserve stable and reliable healthcare coverage."
The study, entitled "The Impact of Reductions in Medicare Advantage Funding on Beneficiaries," is available online at http://www.bcbs.com/issues/medicare/.
The Blue Cross and Blue Shield Association is made up of 39 independent, locally operated Blue Cross and Blue Shield companies that collectively provide healthcare coverage for more than 98 million Americans. For more information on the Blue Cross and Blue Shield Association and its member companies, please visit .
Contact: Kelly Miller, Blue Cross and Blue Shield Association, +1-202-626-4825, kelly.miller@bcbsa.com
