Rate Cuts Possible In Medicare Advantage Plans

WASHINGTON (February 22, 2014) The Obama administration says cuts are on the table next year in rates for Medicare Advantage plans, a private insurance alternative that’s popular with seniors, but the insurance industry is fighting back in an election year.

The administration says costs per person in the private plans will grow more slowly in 2015.

Analyst Matthew Eyles of Avalere Health estimated a reduction of 1.9 percent.

The plans serve nearly 16 million people, about 30 percent of Medicare beneficiaries.

The administration says insurers don't need to be paid as much to turn a profit, because the growth of health care spending has slowed dramatically, but insurers say they'll be forced to pass on higher costs to seniors, and some plans may drop out.

Final rates could change when they are released April 7.

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