Tuesday, September 28, 2010

Mass. Insurer Abandons Medicare Advantage

Cross-posted from Critical Condition on National Review Online.

Remember those Andy Griffith Medicare ads suggesting that retirees wouldn’t lose their benefits? The Boston Globe is reporting that Harvard Pilgrim Health Care, the second-largest health insurer in Massachusetts, has decided to entirely drop out of the market-oriented Medicare Advantage Program (h/t Drudge):
Harvard Pilgrim Health Care has notified customers that it will drop its Medicare Advantage health insurance program at the end of the year, forcing 22,000 senior citizens in Massachusetts, New Hampshire, and Maine to seek alternative supplemental coverage.

The decision by Wellesley-based Harvard Pilgrim, the state’s second-largest health insurer, was prompted by a freeze in federal reimbursements and a new requirement that insurers offering the kind of product sold by Harvard Pilgrim — a Medicare Advantage private fee for service plan — form a contracted network of doctors who agree to participate for a negotiated amount of money. Under current rules, patients can seek care from any doctor.

We became concerned by the long-term viability of Medicare Advantage programs in general,” said Lynn Bowman, vice president of customer service at Harvard Pilgrim’s office in Quincy. “We know that cuts in Medicare are being used to fund national health care reform. And we also had concerns about our ability to build a network of health care providers that would meet the needs of our seniors.”
Readers will recall that the largest source of funding for Obamacare was eliminating $548 billion of funding for privately managed Medicare Advantage plans. Harvard Pilgrim will route its Medicare Advantage customers back into traditional, government-run Medicare, and seek to offer them “Medigap” plans, supplements to traditional Medicare that lack prescription drug coverage:
Harvard Pilgrim in a second mailing this week will urge customers to switch to a new Medicare Supplement plan it will begin offering in October. Unlike Medicare Advantage, which is overseen by the Centers for Medicare and Medicaid Services, the new Harvard Pilgrim plan will be overseen by the Massachusetts Division of Insurance.

It will be “slightly more expensive’’ than the Medicare Advantage plans, but competitive with supplemental insurance plans offered by rivals such as Blue Cross Blue Shield of Massachusetts, the state’s largest health insurer, Bowman said.

She said the Medicare Supplement plan will feature some benefits not covered by the current plan, such as fitness reimbursements, but won’t pay for prescription drugs, which are covered by some versions of the current plan. Instead, seniors can buy separate supplemental drug coverage through a partnership with Coventry Health Care, in Bethesda, Md.


  1. Looks like Pilgrim was not going to be able to compete with traditional Medicare FFS plans. With just 22,000 enrolled I guess that could be difficult to get discounts.

    OT- Josh Barro had an interesting response to the CAp guys on cutting spending.


    This paragraph was interesting.

    "The report notes that the recently passed health care law already includes significant reductions in Medicare reimbursement rates. That's true, and as the authors note, further reductions in reimbursement rates could make it difficult for seniors to receive care, because doctors will take fewer Medicare patients."

    He seems to be implying that Medicare does not act as a price support. If it did, one would expect private insurers to drop their rates in response to lowered spending by Medicare. At some point, if you are interested, would be interested in hearing your ideas about whether or not Medicare acts as a price support or if it sets its rates in response to higher private carriers.


  2. One commonly confused detail regarding the Medicare annual enrollment period is there is no enrollment period for Medicare Supplemental Insurance. You may change a Medicare supplement policy at any time. This year many of those over 65 are choosing Medicare Supplement plans over Medicare Advantage. Some reasons include the freedom from networks in Medicare Supplement, the better benefits, and the new Medicare Supplement plans M & N with premiums more in line with many Medicare Advantage plans. For expert advice you can consult one of the many experts at the Senior Advisors Group.

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