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Almost a million elderly people seek new insurance cover

BMJ 2000; 321 doi: (Published 05 August 2000) Cite this as: BMJ 2000;321:322
  1. Deborah Josefson
  1. San Francisco

    Nearly one million elderly and disabled patients enrolled in Medicare plans associated with health maintenance organisations will have to scramble for new insurance coverage in 2001.

    More than 100 health maintenance organisations have recently declared that they will no longer enrol patients whose bills are paid by Medicare because Medicare does not reimburse them adequately.

    This means that 260 health maintenance organisations are dropping Medicare from their plans from 1 January 2001, affecting 934 000 recipients.

    About 6.2 million elderly people (16% of all Medicare patients) are enrolled in Medicare plans associated with health maintenance organisations. These differ from traditional Medicare plans in that those enrolled receive their coverage from the health maintenance organisation rather than individual providers.

    Health maintenance organisations also tend to provide prescription coverage, spectacles, and early detection screening tests (such as mammography and colonoscopy, which are not covered in standard Medicare).

    Traditional Medicare has fee for service coverage and is the federally financed insurance plan, providing basic healthcare coverage for 39 million Americans aged over 65 years. Patients with renal failure and certain disabilities are also covered under Medicare.

    Most of those enrolled in Medicare plans associated with health maintenance organisations will be able to enrol in another organisation, but an estimated 160 000 will revert to traditional Medicare.

    Karen Ignani, president of the Association of Health Plans, claimed that underpayment and overregulation were causing health maintenance organisations to withdraw from the Medicare system. Although the government had raised Medicare reimbursement by 2%, this had not kept up with healthcare costs, which had risen by 8%.

    Meanwhile, the General Accounting Office, an investigative arm of the US Congress, has found that Medicare overpays health maintenance organisations for patients enrolled in their plans compared with what it would cost if a similar patient were enrolled in traditional Medicare plans. Medicare pays organisations between $402 (£270) and $812 a month for each patient enrolled in a Medicare plan associated with a health maintenance organisation.

    William Scanlon, director of health financing and public health for the General Accounting Office, told a House Commerce health subcommittee: “Medicare loses money on average when each beneficiary joins a managed care plan.”

    Peter Ashkenaz, a spokesman for the Health Care Financing Association, the organisation that administers Medicare, agreed. He said: “The health plans are paid more than enough to cover the basic Medicare benefits. Anything else they want to provide is gravy. It is the additional benefits they make available to beneficiaries [which raise their costs].”

    Meanwhile, US hospitals are about to mount a $30m advertising campaign to persuade Congress to increase Medicare reimbursements. President Clinton has vowed to increase Medicare payments in a five year plan, but the amounts have not yet been determined.

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