Medicare Advantage Plans, AARP & the Healthcare Bill

AARP backed the new Health Care Bill as it went through Congress last year and, as a surprise to us all, in the end it seems that they just might profit from it in more than just a couple of ways too.

The official statement made by AARP’s CEO Barry Rand “We can say with confidence that [the House bill] meets those goals with improved benefits for people in Medicare and needed health insurance market reforms to help ensure every American can purchase affordable health coverage.”

AARP went on further to state that” it (Health Care Bill) will improve health care for older Americans and their families while gradually closing the “doughnut hole” coverage gap in the Medicare prescription drug benefit and limiting insurance companies’ ability to charge higher premiums based solely on age” (please see our comments on the closing of the “doughnut hole” titled “Closing the DoNut Hole – 25% to all)

But what seems strange, is shortly after the released statements by AARP, Susan Jaffe of AARP stated “The new law changes the way the government reimburses insurance companies that offer Medicare Advantage plans to seniors. But it doesn’t abolish the program.” She went on further to say that “instead, what’s being gradually reduced are excess payments to Medicare Advantage plans, the sweeteners they were originally paid to come into the Medicare market”.

Ultimately, in reality it does nothing to lower the costs of health care, but does lower the amount that the government pays to keep costs lower.

This one move alone will now allow;

• The government to stop making payments to all Medicare Advantage companies that are using the monies to keep costs lower
• Free up money that comes from the coffers of Medicare to be used else where

The key for the opposition of the Bill and the opposition of AARP’s stance is the first bullet point, which re-iterates Susan Jaffe’s comments; the payments by the government to MA Plan companies can now be stopped.

This move will, unfortunately force some Medicare Advantage providers to increase premiums and quite possibly cut benefits provided. So in the end, the consumer of MA Plans will get the short end of the stick.

It appears that AARP backed a plan that on the surface will decrease the amount of money it receives from the government in the form of subsidies to keep costs to the consumer lower for the opportunity to increase those premiums and offer fewer benefits for the same consumer.

The opposition is even more critical towards AARP because these cuts would make the plans that they create look even better versus their competitors.

Since AARP is the Advocacy for Seniors and has a membership in the millions it can now easily market towards this membership more effectively than its competitors while offering less to said members.

The beauty of this endorsement  is that AARP in one fell swoop was able to;

• Cut off funding to their competitors – thus getting closer to being the only outlet for services
• Create an opportunity to increase premiums on their clients,
• Create an opportunity to cut benefits covered within their plans
• Still look like the shining Angel who is speaking for Seniors

In a nut shell this move will possibly drive out their competitors leaving them as one of the only options for coverage available which will allow them to capture even more of the market share and more money from said market/their clients with the cherry of increased premiums with lower benefits on top.