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Government Proposed Changes on Medicare Advantage

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Government Proposed Changes on Medicare Advantage

Government Proposed Changes on Medicare Advantage

Medicare advantage is a health insurance for seniors that comes under the umbrella of medicare and is provided by private insurers. The government reimburses the insurance.

The Aftermath of a Proposal for Change in Medicare

The government has proposed a reduction in payments regarding medicare advantage policies. The total reduction in cost as estimated by a certain insurance group is $11 billion. This has dropped the shares of health insurers. The shares of Humana Inc. too have fallen by 10% because of the cost cuts. Its growth is therefore likely to get affected in 2014.Share have dropped for other insurers like Aetna Inc, Cigna Corp, united health etc.

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How can It Affect The Insurers and Beneficiaries?

Health insurance president Karen Ignagni remarked these alterations in plan will upset the medicare advantage coverage of the beneficiaries. That too in a time when people started to think that medicare advantage has quality care better than service against fee scheme of medicare.

Proposals to reduce payment rates in case of medicare advantage have been put forth by medicare services and medicare centers. But they are subject to change according the final rules that will be passed.

Insurers were proposed certain profits that they will be able to make in their business by the government. Medicare advantage, medicare prescription scheme and loss ratios are such business proposals. The government had been paying the insurers a fixed doctor’s fee for individual persons who are members of medicare advantage. As far as other medicare insurance programs are concerned doctors get the reimbursement for their services from the government. Medicare advantage is being enjoyed by approximate 14 million so far.

2 million clients are currently with the Humana which declared the government proposed rates for 2014 as below the level. According to Humana, the medicare advantage opening base rates hinted that the rates of the company were falling. The company had expected a flat rate or a slightly low rate of the base medicare advantage pay. On this were based its growth for 2014 regarding earnings and memberships.

Humana in a regulatory said that it is analyzing every single avenue to deal with these preliminary rates. Its focus is to follow the impact on the company’s growth regarding medicare membership as well as its income in expected earnings per share for Humana is approximately $7.60 and expects a $8.46 in 2014.

President Obama’s attempt to fix the healthcare sector has instigated change in the rates of medicare advantage plan. According to the government a 10% drop in the rates of medicare advantage has occurred after 2010 when the act of affordable care had been passed.

If the rules regarding rate cuts are finalized then it is expected that United Health would leave market of medicare advantage as a result there would be a major set-back in the business. However there are chances that the final rule may be affected by lobbying by the insurers as was seen during the past.

The Shares came Crashing down

In the stock exchange market Humana saw a drop of 6.4%.Shares went down by 1.8 % for another big provider of this plan-the United Health inc. Aetna too fell a 1.2% and Cigna saw a 1.6% drop in its share.

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