In the latest healthcare reforms there was a mandatory freeze in payments of $130 billion over the next decade. This was criticized by President Obama as a corporate giveaway. Initially Medicare had proposed a preliminary increase of 1.28% in February. Since this was vetoed due to the new health care law that mandates the rates remain unchanged, an announcement under the Medicare Advantage program from the U.S. Centers for Medicare & Medicaid Services (CMS) was made yesterday. Under this program it was expected that it would be 14% of the total earning in 2011 at Minnetonka, Minnesota-based UnitedHealth and 42 percent for Louisville, Kentucky-based Humana, Dave Shove.
Brenda Gleason, a health-policy consultant to drug companies and private equity firms said that, “I don’t think you’re going to see any major hit to earnings to these companies in the next 12 months… They’re well-prepared to do what they need to do as far as contracting goes.” According to her 2011 rates will remain unchanged but the balance between the rising expenses may be maintained by raising premiums on customers.
Among the gainers were UnitedHealth, the biggest U.S. insurer by sales that gained 1% in extended trading to $33.50 after the statement. Humana also climbed less than 1 percent to $47.40 in extended New York trading after closing at $47.11. These two have the two highest Medicare Advantage enrollments.
This program was criticized last year by Obama and his followers who cited a report from Congress’ Medicare Payment Advisory Commission. This panel of non involved experts found the government paid insurers about 14 percent more than it spends on its own to cover people in traditional Medicare. The CMS has also announced that nearly $41.6 million has been distributed to state health insurance assistance programs to assist beneficiaries get more information about their Medicare health and prescription-drug plan choices. These grants are one of the first of the two in the fiscal 2010. The total performance grants go up to $1.5 million given for insurance assistance programs in September. This will target people with limited incomes, beneficiaries with disabilities and members of racial and ethnic groups, particularly those individuals with limited English proficiency.
Teresa Niño, director of CMS’ Office of External Affairs, in a written statement said, “Over the past 20 years, the faces of our Medicare beneficiaries have changed, representing more diverse groups with diverse needs. The way we identify these diverse groups and meet their needs must also change.” The assistance programs according to her “are best positioned to reach them in the communities where they live” serving approximately 5.2 million beneficiaries, caregivers and advocates.
Election outcome could bring big changes to Medicare