Seniors Could Face $420-$900 in Higher Costs, Reduced Benefits Next Year Due to New Medicare Advantage Rate Cuts

For Immediate Release
February 6, 2014

Robert Zirkelbach


New Oliver Wyman report estimates impact of a second consecutive 6 percent rate cut 

Washington, D.C. – Seniors and people with disabilities enrolled in Medicare Advantage plans could face premium increases and benefit reductions of $35-$75 per month, or $420-$900 next year, if Medicare Advantage (MA) payments are once again reduced by six percent in 2015, according to a new analysis by Oliver Wyman prepared for America’s Health Insurance Plans. 

Medicare Advantage is the part of Medicare through which private health plans provide comprehensive medical coverage to seniors and other Medicare beneficiaries.  Approximately 15 million seniors, or roughly 28 percent of all Medicare beneficiaries, have chosen to enroll in a Medicare Advantage plan because of the better services, higher-quality care, and additional benefits these plans provide. 

Medicare Advantage payments were cut by six percent last year, which resulted in cost increases and benefit cuts of $30-$70 per month for beneficiaries, according to the Oliver Wyman report.  The report estimates that if the program were subjected to another six percent cut in 2015, seniors would experience additional benefit reductions and premium increases of $35-$75 per month, or $420-$900 for the year.  

CMS, the Medicare agency, each year sets payment rates for Medicare Advantage plans based on many factors.  Preliminary 2015 rates are expected to be announced by CMS on February 21, 2014, with final rates expected on April 7, 2014. 

Another six percent cut to Medicare Advantage payments in 2015 would mean the program would be hit by a combined 12 percent cut over a two-year period, causing cost increases and benefit reductions for seniors of $65-$145 per month, or as much as $1,740 over two years, according to Oliver Wyman.  Cuts of this magnitude would result in a “significant upheaval in the MA market,” including the “potential for plan exits, reductions in service areas, reduced benefits, provider network changes, and reduced MA enrollment,” the report stated.   

“Seniors cannot afford another round of rate cuts to their Medicare Advantage coverage,” said AHIP President and CEO Karen Ignagni. “CMS should protect seniors in the program by maintaining current payment levels next year.”   

The Oliver Wyman analysis notes that additional rate cuts “would disproportionally affect beneficiaries with low incomes, including the 41% of MA enrollees with annual incomes below $20,000 for whom the potential increase in out-of-pocket costs would constitute a significant burden.” 

To view the full report click here.   

AHIP’s Coalition for Medicare Choices (CMC) recently launched a national grassroots and advocacy campaign, called “Seniors are Watching,” urging the Medicare agency to protect seniors in the program by maintaining current payment levels in 2015. 

To learn more about the CMC campaign, visit and follow the coalition on Twitter (@ProtectMyMA) and Facebook. 

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