Medicare Advantage to be Taxed Unless Congress Acts

medicare advantage HIT tax

24 National & Local Groups Call On Congress To Delay Health Insurance Tax

Seniors & Disabled on Medicare Face $245 Increase in 2018 Premiums


Better Medicare Alliance

Sep 13, 2017, 17:11 ET

WASHINGTON, Sept. 13, 2017 /PRNewswire/ — Twenty-four national, state, and local organizations representing providers, community partners, and beneficiaries sent a letter to U.S. Congress calling for swift action to delay the Health Insurance Tax (HIT) for one year.

Over 20 percent of the $14.3 billion tax on health insurance falls on Medicare Advantage and Part D plans that could result in rising premiums and/or increased cost sharing paid by seniors and other beneficiaries covered by Medicare Advantage and prescription drug coverage under part D.

Though Congress previously suspended the tax for 2017, it is scheduled to be reinstated for 2018.  If Congress does not act to delay the HIT, premiums for Medicare Advantage beneficiaries could increase by $22 billion nationwide in 2018 – an additional $245 per year for each enrollee.

“During a time where there is already so much uncertainty among seniors and disabled Americans about health care, Congress has a small window of opportunity to avoid harmful premium increases on beneficiaries. Higher premiums could put the high-quality, comprehensive health coverage Medicare Advantage provides financially out for reach for millions of Americans living on fixed incomes,” said Allyson Y. Schwartz, Better Medicare Alliance (BMA) President and CEO.

An August 2017 actuarial analysis from Oliver Wyman indicates that beyond 2018, premium increases for senior and disabled Medicare Advantage beneficiaries could grow to more than $300 in 2023.

“Forty percent of Medicare Advantage enrollees live on less than $20,000 per year. Medicare Advantage is an important source of coverage for low-income and racial/ethnic minority beneficiaries. For those who suffer from chronic conditions, barriers to critical primary care and disease management covered by Medicare Advantage could be devastating,” said Dr. Elena Rios, President of the National Hispanic Medical Association.

“With Medicare Advantage, providers can deliver the type of important preventive care and chronic care management once reserved for wealthy individuals at far lower premiums and out-of-pocket costs. As Medicare Advantage practitioners who treat low-income seniors across six states, we know firsthand that many simply will not be able to afford premium increases,” said Dr. Christopher Chen, CEO of ChenMed, a primary care provider for seniors headquartered in Florida.

In 2016, nearly 400 Democrats and Republicans in Congress voted to delay the impact of the HIT for 2017. As a result, the average Medicare Advantage monthly premium is four percent lower this year compared to 2016 when the tax was in effect. The letter calls on Congress to vote to delay the tax, before premiums for 2018 are finalized by the end of the year.

View full letter signed by the following organizations:

Area Agency on Aging Palm Beach / Treasure Coast, Inc. (Florida)
Association for Behavioral Health and Wellness
Better Medicare Alliance
ChenMed (Florida)
Healthcare Leadership Council
Iora Health (Massachusetts)
Meals on Wheels America
National Association of Dental Plans
National Association of Nutrition and Aging Services Programs (NANASP)
National Hispanic Council on Aging
National Hispanic Medical Association
National Medical Association
National Minority Quality Forum
New Jersey State Nurses Association
Northwell Health (New York)
Nurse Practitioner Association New York State
Philadelphia Corporation for Aging
Pittsburgh Business Group on Health
Prevea Health (Wisconsin)
SilverSneakers by Tivity (Tennessee)
SNP Alliance
Summa Health System (Ohio)
Teachers' Retirement System of Kentucky
US Chamber of Commerce

Better Medicare Alliance is the leading coalition on Medicare Advantage.
Our mission is to build a healthy future by advocating for a strong Medicare Advantage. As a community of experts, we're leading the way on health care through research, advocacy, and grassroots organization to create a path forward for innovative, modern health care on behalf of seniors and people with disabilities.
For more information, please visit

SOURCE Better Medicare Alliance

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( – The Obama administration is planning new cuts to Medicare, a federal regulatory filing reveals, cuts that could mean higher premiums or seniors losing their coverage altogether.

The new cuts come in the form of a planned reduction in the reimbursement rates the government pays to insurance companies that operate Medicare Advantage plans, which are services administered by private for-profit or non-profit providers that offer additional services than can be found in traditional Medicare.

In a Feb. 15 regulatory filing, the Centers for Medicare and Medicaid Services (CMS) announced the surprised rate cuts of 2.3 percent – meaning it would pay health care providers 2.3 percent less for providing services to patients.

CMS said it was cutting payments because it foresaw the overall costs of the Medicare Advantage program shrinking by 3.2 percent, despite the fact that health care costs – the driver of all federal health care program costs – are only rising.

Medicare Advantage is like traditional Medicare except that its plans are administered by insurance companies, who are paid a per-enrollee reimbursement fee by the government. If insurance companies can provide care to seniors at less than what the government pays them for it, they make a profit.

Medicare Advantage provides coverage for approximately 28 percent of all Medicare beneficiaries, offering them higher-quality services and additional benefits, such as vision and dental care, than the traditional government program at slightly higher cost.

The Obama administration already plans to cut the Medicare Advantage program by $200 billion as part of Obamacare. However, the proposed reductions it announced in February are new, and will cut the program in addition to the planned $200 billion in Obamacare cuts, most of which are delayed in 2014.

The new cuts are also scheduled to go into effect in 2014, but as a function of the normal rate-setting process for that year, not a political effort to delay financial pain for seniors past an important election, as apparently was the case with the original Medicare cuts that Obama signed.

In its regulatory announcement, the CMS said it was assuming that reimbursement payments in traditional, government-run Medicare will be cut, and cited that as justification for cutting Medicare Advantage.

However, while those cuts to traditional Medicare have been set into law for more than a decade, Congress has never allowed them to happen, instituting what is known as the Doc Fix every year, to keep reimbursement payments the same.

Senator Marco Rubio (R-Fla.) wrote to the CMS urging them to consider political reality and reverse their planned Medicare Advantage cuts.

“This assumption is highly problematic because – even though it almost certainly will turn out to be wrong – it translates into lower funding to support the health benefits of the 14 million Medicare beneficiaries who are currently enrolled in MA [Medicare Advantage] plans,” Rubio wrote on March 8.

In other words, if the Obama administration continues with its proposed new Medicare cuts, some or all of the 14 million seniors who get health care through the MA program could be negatively affected, that is, paying higher premiums or possibly losing coverage.

This is because the proposed cut could make the program unprofitable for insurers, who would be forced to either stop offering MA plans or pass the increased costs on to seniors in the form of higher premiums.

One health insurance provider told its shareholders that the proposed rate cuts could mean the end of Medicare Advantage all together.

“There are going to be some markets that at these rates, if they go the way they’re going, it’s going to be very hard for Medicare Advantage to survive,” Universal American Corp CEO Richard Barasch said in a February 19 conference call with shareholders, the industry publication Health Plan Weekreported.

“I think it’s going to be sort of a market-by-market, company-by-company exercise,” Barasch said.