HMOs serving a half-million elderly are pulling out of Medicare

Friday, September 21st 2001, 12:00 am
By: News On 6

WASHINGTON (AP) _ HMOs serving a half-million older Americans have told the government they are withdrawing from Medicare, leaving their patients to find other managed care plans or go back into the traditional Medicare program.

That's half as many people as were affected last year, when health plans covering close to 1 million elderly pulled out of the program. Since HMOs began withdrawing nearly four years ago, more than 2 million seniors have had to change coverage.

Health maintenance organizations complain that Medicare is not paying them enough to participate in Medicare and are lobbying Congress for more this year. Like HMOs that operate in the private sector, these insurance companies are paid a flat fee for each senior who enrolls in their health plans, then must bear the costs of their health needs.

When the Medicare HMO program was created, the hope was that managed care could help control costs in Medicare, just as it stemmed costs in the private sector.

About 5.6 million Medicare beneficiaries _ or 14 percent of the 39 million served _ were in managed care plans earlier this year. That was down from 6.3 million in 2000 and will surely fall further as many of the people who lose their HMO coverage in this latest round move into traditional Medicare, where the government pays bills one at a time.

HMOs began pulling out of the program after Congress trimmed payments in 1997 as part of a larger deal to balance the budget.

Congress agreed to spend more on Medicare HMOs last year, adding $11 billion over five years. Insurance companies say that's still not enough.

Karen Ignagni, president of the American Association of Health Plans, an HMO trade group, said Friday that many of the HMOs still in Medicare are likely to cut benefits and increase premiums for their seniors. This could prompt even more participants to drop out.

``Their costs are rising far faster than their federal funding,'' Ignagni said in a statement Friday. ``Millions of American seniors are counting on a concerted, bipartisan effort to rescue the program.''

The chances of Medicare getting more money are unclear. The money available for domestic spending was already nearly gone before last week's terrorist attacks, which will cost the government tens of billions of dollars in cleanup, rebuilding and military retaliation.

Trying to keep HMOs in Medicare, the government said last month it would loosen rules and allow them to offer health plans exclusively to employers for retirees and workers who stay on the job past 65.

Specifically, the plan allows an HMO to sell employer-only plans in a given market. Until this change, a uniform plan had to be offered to all people eligible for Medicare in a given county.

The idea is to allow insurers to offer employers Medicare HMO plans that are similar to what they provided workers before they retired or turned 65 and became eligible for Medicare.