NCPA - National Center for Policy Analysis

Managed Care Groups Are Bailing Out Of Medicare

July 28, 1999

More than 90 insurers have announced they will end Health Maintenance Organization (HMO) Medicare coverage for 327,000 seniors next year. The pullouts will affect 329 counties, according to the Health Care Financing Administration.

According to a USA Today analysis, mainly counties where there are few enrollees and government payment rates are lowest will be affected.

  • Fifty-six percent of the withdrawals will occur in counties where payment rates fall into the lowest of four tiers -- $401 to $504 per member, per month.
  • Two-thirds of withdrawals will occur in counties where the health plans had 500 or fewer enrollees.
  • Thirty-four percent of the counties will be left without a Medicare HMO option -- while 19 percent will have only one other choice of a plan.
  • New York state will be hardest hit with 38,703 people affected -- followed by Louisiana, Texas, Arizona and Florida.

Source: Julie Appleby and Barbara Hansen, "Why Are Insurers Dropping Medicare HMO?" USA Today, July 28, 1999.


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