GOP Governors Hit Obama Administration on Medicare Advantage Rates

Photo: Pete Souza

Three Republican governors yesterday blasted President Barack Obama over changes to next year’s Medicare Advantage rates, writing in a letter that the Obama administration’s recent rate announcement was “little more than political theater.”

While the administration says Medicare Advantage plans will get a slight pay bump next year, Govs. Rick Perry (Texas), Rick Scott (Fla.), and Bobby Jindal (La.) charge that insurance analysts still anticipate plan rates to drop as much as 3.5 percent. “This is on top of a 6 percent cut to fiscal year 2014 payments,” the governors wrote. “Collectively, these cuts will significantly harm America’s seniors.”

The Centers for Medicare and Medicaid Services, the federal agency in charge of Medicare, announced last week that 2015 reimbursement rates would increase by .4 percent for Medicare Advantage, the private plans that offer the Medicare benefit.

That announcement reversed course on planned cuts to Medicare Advantage—which provides coverage to roughly 30 percent of all Medicare beneficiaries—that are in part caused by reductions included in the Affordable Care Act, or Obamacare.

If those cuts had gone into place, consulting firm Oliver Wyman, commissioned by the insurer trade group America’s Health Insurance Plans, estimated seniors would have faced premium increases and benefit reductions of $35 to $75 per month, or $420 to $900 next year.

The governors called on CMS to work with Congress to prevent any plan cuts, but health policy analyst Alyene Senger said the new 2015 rate is a “short-lived pardon” for the Medicare Advantage program.

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“We’ve seen this scenario play out before because of political pressure,” said Senger, a research associate with The Heritage Foundation. “Medicare Advantage escapes the administration’s knife this time but it’s still in danger of being on the chopping block in future years.”

This story was produced by The Foundry’s news team. Nothing here should be construed as necessarily reflecting the views of The Heritage Foundation.

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