Musical Medicare for Dual-Eligible Seniors

Just when it looked like the new market for Medicare drug plans was starting to settle down, the government unveiled changes in premiums and plans for 2008 that could shake things up.

null Right off the bat, UnitedHealth Group and Humana, the gorillas of Medicare drug plans, are set to lose nearly 1 million members between them. The seniors on the move are eligible for both Medicare and Medicaid and get their benefits heavily subsidized because of low income or disability.

Medicare wants to get the best deal for the coverage it pays the most for, so the business is put out for bid each year. After averaging the bids, the winners (for a change) are the companies that come in below average. Those whose bids were above average lose.

On that measure, UnitedHealth was the big loser of the bidding sweepstakes this time around. Because its bids exceeded the average in 18 of 34 Medicare regions, 650,000 of its members will be switched to other companies. Humana could lose 300,000, analysts estimate. By the same measure, WellCare Health Plans will probably see a sizeable increase.

In all, the changes will force 1.6 million, or 26% of, dual-eligible seniors to be assigned to new insurers. “Thats the largest exodus we’ve seen since the start of the drug benefit (in 2005),” notes Lindsey Spindle of Avalere Health. It could also mean a new round of hassles come January as many of these enrollees find themselves dealing with new preferred lists, or formularies, for medicines.

Health insurers have taken note that other seniors don’t like to change plans if they don’t have to, even if it costs a little more. The biggest plans are increasing their monthly premiums between $5 and $10. Humana, which secured so many of its members with rock-bottom prices a couple years ago, will increase its most basic plan, which currently costs between $10.20 and $18.20, by more than $10.

Photo by Rick Audet via Flickr