Friday, September 17, 1999
HMOs to raise fees for seniors
Insurers cut benefits as well
BY TIM BONFIELD
The Cincinnati Enquirer
Thousands of Tristate seniors will be charged hundreds of dollars more in health care premiums next year, and will get weaker coverage.
Five Medicare HMOs that operate in Greater Cincinnati have announced their premiums and benefit packages for 2000. In most cases, the changes are bad news for the nearly 65,000 Cincinnati-area seniors enrolled in Medicare HMOs.
For most, premiums will zip from $0 a month to $10, $39, even $59 a month.
Many will see their plans slash annual spending caps for medications while charging higher co-payments to fill prescriptions. Many will pay $10 instead of $5 to see a doctor.
Some will lose dental benefits. Some will be charged $100 or $250 for hospital stays that previously were covered 100 percent.
“Maybe we should all go back to regular Medicare,” said Eleanore Chapin, a Medicare HMO member living in Fort Thomas. “HMOs are running rampant over people and a lot of doctors don't want to deal with them anymore.”
HMO officials, however, say the premium increases and benefit cuts are the result of Congress refusing to pay for the rising costs of medical care.
“The simple fact here is that health care costs did start to rise more dramatically in 1998 and it continued in 1999,” said Bruce Turner, general manager for Aetna U.S. Healthcare's southern Ohio region. “And the reimbursement rates from HCFA (the Health Care Financing Administration, the agency that runs Medicare) have not kept pace.”
The biggest problem for the HMOs has been soaring prescription drug costs bumping into Medicare budget restrictions set in 1997. Anthem Blue Cross reports that its drug costs soared 85 percent in five years. Aetna's drug costs climbed 30 percent in one year in southern Ohio.
In response, HMOs have tried to limit drug costs by creating preferred lists of medications called formularies. They also have tried to cut payments to hospitals and doctors — a strategy that recently has started to backfire.
This summer, the St. Elizabeth hospitals in Northern Kentucky and the Mercy hospitals in suburban Cincinnati dumped Secure Horizons in a contract dispute. Meanwhile, doctors in Cincinnati and nationwide have been talking about forming unions.
Now, seniors are starting to feel the pinch.
The Balanced Budget Act of 1997 sliced $11 billion in projected spending growth from the Medicare program in an effort to extend the number of years before the system would be expected to go bankrupt.
“Well, where do you think that $11 billion is coming from? It's coming out of the pockets of the doctors, the hospitals, the HMOs and the members,” said Tom Anthony, president and chief executive of PacifiCare of Ohio.
Medicare HMOs evolved as a market-driven approach to slowing the soaring growth of the Medicare budget.
HMOs agreed to an unwieldy county-by-county reimbursement formula that pays the HMOs slightly less than what Medicare historically paid. The HMOs figured they could come out ahead by pressuring hospitals and doctors to offer discounts while offering preventive care services that encourage seniors to live healthier lives.
Many seniors signed up, choosing to cash in on lower out-of-pocket fees and popular prescription drug benefits in return for limitations on their access to doctors and hospitals.
HMO managers predict the premium increases will slow new enrollment and prompt a wave of switching among HMOs. But they do not think many seniors will abandon Medicare HMOs for traditional Medicare.
That's because even with the increases for 2000, most Medicare HMOs will be cheaper for most seniors than buying a traditional Medicare supplemental plan.
“In the early months of 2000, a lot of seniors will take a wait-and-see attitude,” Mr. Turner said. “But once they're over the shock, they'll begin to ask, "Is this still worth the cost?' For many, the answer will be yes.”
Long-term, however, the financial stability of Medicare remains unresolved. And the prospect for even more cutbacks in Medicare HMOs remains real.
While politicians argue policy, the steadily rising costs of new medicines and better treatments, plus the higher demand for medical care from America's graying population, have begun to change the equation that made Medicare HMOs seem like an attractive option for seniors.
“Locally, we're playing out the national health care debate that's been raging for four years,” Mr. Anthony said. “There isn't enough money in the system.”
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