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April 8, 2014

Benefits to rise for Medicare Advantage plans

The administration says payments should rise about 1 percent overall.

In a move that blunts a potent line of political attacks from Republicans, the Obama administration reversed itself Monday, announcing that private health plans that provide Medicare benefits will see a slight increase in government payments next year, rather than the reduction that was proposed earlier.

Congressional Democrats, many facing tough re-election bids, recently joined Republicans in asking that these private health plans, known as Medicare Advantage, be spared from payment cuts next year, even though they receive an average of 6 percent, or $8 billion, more this year to cover their enrollees than it would cost under the traditional Medicare program.

In February, the administration proposed a 2 percent cut in Medicare Advantage payment rates as part of an Affordable Care Act initiative to help bring the payments more in line with the regular Medicare program.

The reduced payments would cause some plans to pare down benefits, but they would still have to provide all the benefits covered by traditional Medicare.

A February report from Barclay’s projected that advantage plans “have ample room to adjust benefits downward while maintaining benefit levels that are better for their members than the traditional [Medicare] fee for service program.”

But a series of attack ads by the insurance industry and Republican-backed groups said that the Medicare Advantage cuts would reduce benefits for seniors, cause premiums to spike and force some plans to pull out of certain markets altogether, making access to coverage more difficult.

The ads helped Republican David Jolly narrowly defeat Democrat Alex Sink in a House race in the Tampa, Fla., area that was largely viewed as a crucial early test of how the healthcare law could affect the November midterm elections.

Sink’s loss, in a match that was considered a tossup, bolstered the GOP’s harsh messaging strategy on the Affordable Care Act and caused Democrats nationwide to rethink whether or not to embrace or ignore the law in their upcoming campaigns.

Senate Democrats, including Al Franken of Minnesota and Charles Schumer of New York, joined House Democrats like Reps. John Barrow of Georgia and Patrick Murphy of Florida in asking that Medicare Advantage payment rates remain untouched next year.

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