Some see huge hike for Medicare Advantage

Notices of 2015 rates for Medicare Advantage plans started landing in mailboxes last week,  and at least one local plan is seeing premiums more than triple.

I heard from David Darwin of Charlotte and Gary Ludwick of Huntersville,  both of whom were told that their HMO premium from Blue Cross and Blue Shield of North Carolina is going from just under $19 a month to $64.40,  with their out-of-pocket limit rising from $3,400 to $4,500.  Both wanted to know what's going on.

That runs counter to the trends announced by the federal Centers for Medicare & Medicaid Services. The agency says 2015 premiums are rising an average of $2.94 next year,  to $33.90 a month,  and estimates the actual hike will be more like $1.30 a month on average as  some choose lower-cost plans.

"The vast majority of (Medicare Advantage) enrollees will face little or no premium increase for the next year with 61 percent of beneficiaries not seeing any premium increase at all," the release says.

Ludwick and Darwin,  not surprisingly,  are wondering if their notice foretells bad news for more people in this area.  "Maybe you can get some answers as to what caused such outrageous price hikes across the board,"  Ludwick emailed,  "and I'm also curious if the costs for Obamacare have any bearing on this."

"I just think people need to understand what they're about to be hit with,"  said Darwin,  a textile retiree who also blames the spike on the Affordable Care Act.

Source: Kaiser Family Foundation

Some background:  Medicare Advantage is an alternative to traditional Medicare,  which provides health coverage for the elderly and disabled.  About 30 percent of the total Medicare population chooses this approach,  which involves buying a policy through a private insurance company.  This is separate from the ACA marketplace that has gotten so much attention in the past year,  but it works in a similar way:  Customers have a choice of various plans based on where they live.  In 2014, Mecklenburg residents had 22 plans to choose from.

Medicare Advantage also costs the government more than traditional Medicare.  The ACA cut Medicare Advantage payments,  but instead of the expected decline in participation,  record numbers are choosing that route,  according to a Kaiser Family Foundation report.

"When Congress debated the payment reductions in 2010,  forecasters and analysts also projected that reductions would drive insurers to raise premiums, cut extra benefits and even pull out of the Medicare Advantage market as they did after the Balanced Budget Act of 1997.   Thus far, however, the response by insurers to the ACA cuts has been more muted,"  says the report by Tricia Neuman and Gretchen Jacobson.

So what's going on with Darwin's and Ludwick's policy? 

Neuman

I asked Neuman,  the foundation's Medicare expert,  what to make of the big bump in this local plan.  The 2015 national data just came out Thursday,  so she hadn't had time to analyze it in detail when we spoke.  There are always wide variations among plans,  she noted,  and the averages indicate these folks are seeing a hike that's an outlier on the high side.  Market conditions seem more likely to be the source than the ACA, she said.

"If it was really attributable to the law you'd be seeing it more across the board,"  Neuman said.  "It would be more the norm than the exception."

Starting Oct. 15,  Medicare Advantage customers will have a chance to shop around and see if they can get a better plan for less money.  It will be interesting to see what the Mecklenburg market offers.