Premiums inching higher for popular Medicare plans

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By RICARDO ALONSO-ZALDIVAR, Associated Press

WASHINGTON (AP) — Monthly premiums for popular private insurance plans through Medicare are only inching up next year, the Obama administration said Wednesday, trumpeting good news for skeptical older voters on a closely watched election-year issue.

Republican Mitt Romney has warned that cuts in President Barack Obama's health care law would hobble programs such as Medicare Advantage, the private insurance option that's a thriving part of Medicare. But deputy Medicare administrator Jonathan Blum said such dire predictions have not proved to be true.

The program "is stronger than ever," Blum told reporters. "Beneficiaries should expect the overall quality of care is improving. ... Also, cost growth remains controlled."

Average monthly premiums for Medicare Advantage plans will rise by $1.47 in 2013 to $32.59, said Blum. When premiums and out-of-pocket costs such as co-payments are combined, Medicare estimates that beneficiaries will actually spend less on average.

Nearly 1.5 million more seniors are expected to join the plans for next year, continuing a strong growth trend. That would bring total enrollment to 14.5 million, approaching 30 percent of all Medicare beneficiaries. Most major insurance companies have a stake in the market.

The news follows Medicare's recent announcement that prescription drug premiums would remain stable for the third year in a row, about $30 a month.

But there's an important caveat: The estimates are averages, so they don't reflect individual experiences.

Some beneficiaries will see their premiums and cost sharing go up; others will see a decrease. They can shop around for a better deal during open enrollment season, which starts Oct. 15.

Indeed, if past experience repeats itself and beneficiaries switch to lower-price plans, Medicare says the average increase in premiums will be held to just 57 cents a month in 2013.

The administration says Medicare Advantage premiums have gone down 10 percent since the president's health care overhaul passed in 2010, but seniors don't seem reassured. Democrats are struggling to regain the confidence of older voters upset over Medicare cuts that will help provide coverage to the uninsured.

An Associated Press-GfK poll this week found that among likely voters of all ages, Obama has the advantage on handling health care. Fifty percent trust him to do a better job, compared with 43 percent who prefer Romney's approach.

Shift the focus to voters age 65 and over, and the poll found 48 percent favor Romney, 44 percent Obama. Because older people vote more faithfully, health care remains a potential vulnerability for Democrats.

Republicans dismissed Wednesday's good news, saying the effect of Medicare cuts is being temporarily masked by an $8-billion bonus program the administration started last year. The program awards quality bonuses to Medicare Advantage plans rated merely average, and its legality has been questioned by Government Accountability Office, a nonpartisan congressional agency.

Chris Jacobs, a senior GOP policy analyst in the Senate, called the bonuses "an attempt by the administration to essentially print money so its Medicare Advantage program goes away before the 2012 election."

The insurance industry remains concerned. "Given the size and scope of these cuts, Medicare beneficiaries are likely to face higher costs and coverage disruptions in the coming years," said Karen Ignagni of America's Health Insurance Plans, the industry's top lobbyist.

Blum said Medicare's approach is working to hold the line on costs and improve quality, and he expects that to continue.

"We are overseeing the program in a much stronger way," said Blum. "We are negotiating much more intensively. ... We have a very competitive marketplace. The combination of the competition we are fostering, the focus on quality, the focus on compliance ... that, to me, is what's producing these results."

Outside analysts say there is another factor, potentially much bigger. Overall health care costs have been in a lull attributed to the sluggish economy.

"Medical costs have gone up a little, but not a lot," said Dan Mendelson, president of Avalere Health, a market analysis firm. "You don't see the kind of (service) utilization increases that you saw in past years. That creates an environment where the federal government can give a modest rate increase, and the plans say, 'Thank you.'"

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Associated Press deputy director of polling Jennifer Agiesta contributed to this report.

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