Proposed 2014 Medicare Advantage Cuts Draw Concern

February 28th, 2013 | Posted by Angela Chen in Medicare Advantage | Medicare Costs
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2014 Medicare Advantage CutsThe announcement of Medicare Advantage payment cuts of more than 2% in 2014 has caused health insurer shares to fall and is a source of concern for seniors and health care professionals.

Payment per person for Medicare Advantage plans could fall by 2.3% in the coming year, as recently announced by the Centers for Medicare and Medicaid Services (CMS). These payment cuts are part of the $716 billion in cuts over the next ten years as a result of health reform, also known as Obamacare. This not only caused the shares of several major health insurers to slip on the first trading after the announcement, but also created concern over the impact of these cuts.

Medicare Advantage, also known as Medicare Part C or MA, plans are private health insurance plans that are approved by Medicare and provide beneficiaries with all of their Original Medicare (Part A and Part B) benefits. In 2012, 1 out of every 4 Medicare beneficiaries chose to receive their Medicare hospital and medical benefits through a Medicare Advantage plan. This means that these proposed MA cuts could affect up to 25% of the Medicare population, in addition to the private health insurance companies who run these plans. In some states, the percentage could be even higher, like the 36% reported in California who are enrolled in MA plans.

Some health care and insurance industry professionals, including America’s Health Insurance Plans (AHIP), are concerned that these Medicare Advantage cuts will hurt seniors and minorities and increase costs for all.

AHIP states that MA plans are not only popular with seniors, but also with seniors with low incomes and/or who belong to minority groups. Private health insurance plans like MA plans are more popular among black and Hispanic seniors than all beneficiaries as a whole, according to AHIP’s report. They also state that a slightly higher percentage of Medicare Advantage beneficiaries have an annual income below $20,000.

In collaboration with the consulting firm Oliver Wyman, AHIP also released a study stating that seniors may see a significant premium hike and benefit cut under the new proposed Medicare Advantage payment cuts. MA cuts may total around 7% to 8% over the next year, which would result in benefit cuts and/or premium increases of $50 to $90 per month for each individual enrolled in an MA plan.

The Hill and Yahoo! News also reported on these stories.

Are you currently enrolled in a Medicare Advantage plan? Would you still consider enrolling in one given the proposed payment cuts that may be happening over the next few years?


Medicare has neither reviewed nor endorsed this information.


As a contributor and editor of the PlanPrescriber Blog, has extensive knowledge about the Medicare program and the various associated private insurance products, including Medicare Advantage, Medicare Part D, and Medicare Supplement (Medigap) plans. Her areas of interest include health and wellness, marketing, journalism, and social media.

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