NCPA - National Center for Policy Analysis

Bad News in the Mail tor Members of Medicare HMOs

November 7, 2002

Patients enrolled in Medicare Health Maintenance Organizations are being informed that they will face sharply higher premiums, as well as curtailed benefits, next year. In addition to the payment increases, most of the insurers are raising hospital co-payments and charges for seeing specialists.

  • Also, many insurers will pay only for generic drugs -- and a few are eliminating drug benefits entirely.
  • Some will charge substantial payments for chemotherapy and radiation.
  • This year, out-of-pocket health expenses for individual Medicare HMO enrollees is estimated at $1,786 on average -- up from $976 as recently as 1999.
  • Medicare HMO insurers have fled dozens of unprofitable markets in recent years as health-care costs of skyrocketed.

Medicare HMOs were originally designed as a low-cost alternative to Medicare. Some observers say the increased charges make them no longer a clearly better deal than traditional Medicare. According to one, "It may work in a few markets for a few people, but by and large Medicare HMOs are a bum deal."

Source: Julie Appleby, "Medicare HMOs Cut Coverage, Crank Up Costs," USA Today, November 7, 2002.

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