WASHINGTON – Clara Mae Jones joined the Medicare+Choice program in 1999 because its $19 monthly premium, prescription drug coverage and hospital rates seemed like exactly what she needed. But before the end of her first year, the 76-year-old Baltimore County resident saw her monthly premium rise to $79 and continue to rise every year until it reached $139. “I can’t afford no $140 a month,” said Jones, who left the program. She is not alone. Nationally, enrollment in the Medicare+Choice program in 2002 has fallen 22 percent from a high of about 6.3 million people in 1999, according to the Center for Medicare and Medicaid Services. The drop was even steeper in Maryland, where Medicare+Choice enrollment fell more than 73 percent from 100,000 in 1999 to just above 25,000 in 2002, going from 16 percent of the state’s total Medicare population to just 4 percent. Maryland ranks sixth in the nation for disenrollment rates, according to a recent study released by the Public Citizen activist group. Medicare+Choice, created under the Balanced Budget Act of 1997, was supposed to save the government money while giving seniors services, like prescription drug coverage and preventive health care, that they could not get under Medicare. Medicare+Choice let seniors sign up with private managed-care organizations that provided them with care for a monthly capitation, or payment, from the federal government. The program began offering service in 1999 and has been buffeted by a steady loss of providers, who say they cannot afford to offer insurance at the rates the government is paying, and subsequent increases in premiums by the remaining providers. Already in 2003, the Center for Medicare and Medicaid Services says nearly three dozen providers have pulled out or reduced service areas, affecting nearly 200,000 Medicare+Choice beneficiaries. The drops in the private-oriented program come as the federal government continues to consider privatizing portions of the Medicare system. “Private insurance companies are not the model for Medicare,” said Priscilla Chatman of the National Committee to Preserve Social Security and Medicare. “We feel it’s very dangerous. Private companies are in the business to make money, but you cannot make money off this population.” Chatman’s organization originally supported Medicare+Choice, but the exodus of providers convinced it of the inability of private insurance companies to care for seniors. But the insurers lay the blame for the failed program squarely at the government’s feet. “This is essentially a problem created by the Balanced Budget Act of 1997,” said Mohit Ghose, public affairs director for the American Association of Health Plans.
Ghose said the act set reimbursement formulas that are woefully outdated, leaving Medicare+Choice plans operating at a loss. That has forced plans to increase premiums while simultaneously cutting programs. Declining enrollment ultimately hurts Medicare beneficiaries most because they can no longer get the services Medicare+Choice companies provide. “You do not see high levels of voluntary disenrollment,” from Medicare+Choice programs, he said. One company that interrupted its Maryland coverage was Aetna. “We decided we could not offer a competitive rate,” for Medicare+Choice, said Walt Cherniak, Aetna’s Maryland spokesman. “We lost money every time we served a member.” Cherniak said federal reimbursement rates were the primary reason for the company’s departure from most markets, reducing the number of states with Aetna Medicare+Choice from more than a dozen to four since 1999. Cherniak said there is no way Aetna — which has since returned to the state with a new health plan for Medicare beneficiaries — could continue to offer traditional Medicare+Choice coverage with what he called an artificially capped reimbursement rate. “There is clearly a need for reform in the Medicare+Choice program,” Cherniak said. “The reimbursement issue needs to be addressed.” But Joyce Dubow, an AARP senior policy adviser, said that pointing to reimbursement rates as the cause for health providers pulling out of Medicare+Choice oversimplifies the issue. Competitive factors and low enrollment rates are equally important problems, she said. The president of Elder Health Maryland HMO Inc. agreed, saying that the demise of some providers was as much due to the fact that they set out to control too large a market share as to the low reimbursement rates. Bruce Sturm said that by focusing on low-income, underserved populations, designing benefits to complement Medicare and Medicaid and focusing on preventive care, Elder Health has not only been able to survive, but to expand. Elder Health primarily serves the Baltimore area, but plans to expand to Prince George’s and Montgomery counties. Dubow also pointed to General Accounting Office reports showing that the government has paid about 13 percent more for the health care of individuals in the Medicare+Choice than it would have paid if they were in the fee-for- service program. She said that is because Medicare+Choice providers get the monthly capitation whether enrollees seek care or not, and that most Medicare+Choice enrollees seem to use fewer services than their fee-for-service counterparts. “Medicare+Choice programs, for a variety of reasons, have not saved Medicare any money,” Dubow said. Still, the decline in Medicare+Choice enrollment and providers concerns Dubow, since those losses effectively remove the choice that the program was designed to create. “We think that people should have a choice. There is no one right plan for everyone,” Dubow said. She said many seniors — like Clara Jones — find themselves squeezed between fixed incomes and rising premiums. Jones, who suffers from hypertension, high cholesterol, angina, arthritis and diabetes, said that when she looks at her $900 a month income, and compares it to the cost of drugs, she often does without. “If I have the money, I get the medicine; if I don’t have it, I don’t,” said Jones, who plans to join Aetna’s health plan. She said she’s had to cancel doctors’ appointments because she couldn’t afford the co-payment. “If you can afford it, you can go,” she said. “If not, you just out of luck.”