Medicare(plus)Choice Enrollees Face Rising Premiums, Limits on Benefits in First Look at 2003 Medicare Managed Care Trends

4/10/2003

From: Mary Mahon, 212-606-3853, 917-225-2314, or mm@cmwf.org Bill Byrne, 212-606-3826 or bkb@cmwf.org both of The Commonwealth Fund Marsha Gold of Mathematica Policy Research, Inc., 202-484-4227 or mgold@mathematica-mpr.com

NEW YORK, April 10 -- An early look at 2003 trends in benefits and premiums in Medicare(plus)Choice plans reveals that more enrollees are experiencing limits on benefits such as prescription drug coverage and are facing rising average monthly premiums and increased cost-sharing for their health care, according to a new report from The Commonwealth Fund.

In Medicare(plus)Choice Plans Continue to Shift More Costs to Enrollees, Lori Achman and Marsha Gold of Mathematica Policy Research, Inc., analyze trends in premiums and benefits from 1999 to 2003. Approximately 4.5 million elderly and disabled beneficiaries are currently enrolled in Medicare managed care plans.

Achman and Gold find that monthly premiums for enrollees in Medicare(plus)Choice average $37, up from $32 in 2002, and $23 in 2001. The percent of enrollees with drug coverage is slightly down to 68 percent from 72 percent in 2002. A larger percentage of plans provide coverage for generics only, and have annual caps on drug coverage of $500 or less. A higher percentage of enrollees are also facing inpatient hospital copayments and copayments for physician visits.

"Benefits are continuing to erode, although some of the changes are less dramatic and harder to detect than in previous years," said Marsha Gold, senior fellow at Mathematica. "The details of the limits are more complicated, placing greater burden on beneficiaries to research which plan better meets their health care needs, and putting them at risk for high unexpected out-of-pocket costs."

Key findings include:

-- Beneficiary premiums are rising. Monthly premiums increased again in 2003, to an average $37 from $32 in 2002. The percent of enrollees with a zero premium plan is 38 percent in 2003, the first time since Mathematica has tracked premiums that the percent of enrollees in a zero premium plan is smaller that the percent of enrollees in a plan with a premium of $50 or more per month. -- Prescription drug coverage is becoming more restrictive. The percent of enrollees with prescription drug coverage dropped slightly, to 69 percent in 2003 from 72 percent in 2002, and more plans are limiting coverage to generics only. -- More plans are charging hospital inpatient copayments. The percent of enrollees in plans with inpatient hospital copayments increased in 2003 to 82 percent. This comes on top of a substantial increase in 2002. However, the percent of enrollees in plans with cost-sharing for hospital outpatient procedures decreased, from 70 percent in 2002 to 54 percent in 2003. -- Copayments for physician visits are increasing. In 2003, 24 percent of enrollees are in plans with a primary care physician copayment greater than $15, compared to 4 percent in 2002. Sixty-three percent of enrollees are in plans with a specialist copayment greater than $15 compared with 41 percent in 2002.

"The increasing number of Medicare Plus Choice plans requiring co-payments for hospital care, lab tests, or x-rays, and stricter limits on drug coverage is disturbing, particularly as it is the sicker and more vulnerable enrollees who bear much of the burden of these changes," said Karen Davis, president of The Commonwealth Fund. "These trends only reinforce the importance of reforming Medicare now to cover pharmaceuticals and limit out of pocket cost sharing for all beneficiaries."