Report says Medicare HMO enrollees see nearly 50 percent rise in out-of-pocket costs

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Posted 8:35AM on Thursday, February 14, 2002

WASHINGTON - Out-of-pocket costs for Medicare recipients enrolled in health maintenance organizations rose by nearly 50 percent over three years, a study shows. The report from The Commonwealth Fund, a New York-based health research company, examined people enrolled in Medicare's managed care plan -- known as Medicare Plus Choice -- from 1999 to 2001. The sickest beneficiaries, who are also likely to have low incomes, had the highest increase in out-of-pocket costs. Medicare's managed plan enrollees in poor health spent an average of $2,088 out-of-pocket for prescription drugs last year -- a 56 percent increase from 1999, the report said. Enrollees in good health spent an average of $158 -- a 47 percent increase from 1999. About 14 percent of Medicare's beneficiaries are enrolled in health plans, and many joined because of the extra benefits HMOs offer that are not covered by the traditional Medicare plan; prescription drug coverage, for example. But many of the health plans have withdrawn from the program or cut back on benefits in recent years, saying federal cuts made in 1997 have made it costly for them to participate. Despite the increases, Medicare's managed care plans remain a good value for beneficiaries, the report said. Previous studies of costs for beneficiaries in the traditional Medicare program have estimated out-of-pocket costs of $3,142, considerably higher than the average $1,438 paid by managed care beneficiaries last year. "We have been warning members of Congress that if they continue to ignore the problems and not address it, there's going to be a very significant effect on beneficiaries," said Karen Ignagni, president of the American Association of Health Plans. "Congress needs to address the fundamental problems in this program and it's urgent." President Bush has included a 6.5 percent increase for Medicare's managed care plans in his budget proposal for the upcoming year. Ignagni said the money would go a long way toward stabilizing the program. In a separate report by the Commonwealth Fund, researchers found that average monthly premiums in managed care plans went from $14.43 in 2000 to $22.94 last year. The proportion of enrollees with prescription drug coverage fell from 78 percent in 2000 to 70 percent in 2001. One-third of managed care enrollees were charged a copayment for an outpatient visit last year, compared with just 13 percent in 2000, the report said. A report released by Dartmouth Medical School researchers found that health care is not more efficient in areas with high per capita Medicare spending. The report, which appears in the journal Health Affairs, proposes a national demonstration project that would connect health care organizations serving the traditional Medicare program with government agencies that would help the providers improve care and become more efficient.