Private insurers including UnitedHealth Group Inc. and Humana Inc that are subsidized by the government, give expanded coverage under Medicare Advantage to people above 65 years beyond the standard federal program.
In May, Medicare projections that membership would increase to 12.5 million in 2012 before falling to about 9.2 million by 2018 as cuts kick in on federal subsidies to insurers, saw an enrollment rise to 12.8 million, which exceeded the projections. The average premiums dropped to $31.54 per month.
Marilyn Tavenner, acting administrator of the Centers for Medicare and Medicaid Services said that not only are average premiums lower, but the plans are better. The health-care overhaul was motivating plans to improve the quality of their coverage.
Robert Zirkelbach of America's Health Insurance Plans, a trade group in Washington, said that plan members will face "higher out-of-pocket costs, reduced benefits and fewer health-care choices" as the health law's payment cuts increase. The business will continue to grow despite the cuts. Baby Boomers who are entering the Medicare market presently are more comfortable with managed-care plans than older people.
Large plans like Humana will be more successful than smaller plans because it gives them an edge at managing the actuarial risk of insuring older people.
According to the Kaiser Family Foundation, there were around 48 million people who enrolled in Medicare in 2011.