By Jonathan Easley - 04/07/14 05:15 PM EDT
The Obama administration announced Monday that planned cuts to Medicare Advantage would not go through as anticipated amid election-year opposition from congressional Democrats.
The cuts would have reduced benefits that seniors receive from health plans in the program, which is intended as an alternative to Medicare.
Instead, the administration said the federal payments to insurers will increase next year by .40 percent.
The healthcare law included $200 billion in cuts to Medicare Advantage over 10 years, in part to pay for ObamaCare.
The Centers for Medicaid and Medicare Services (CMS) on Monday said changes in the healthcare market meant it did not need to make those cuts to Medicare Advantage this year.
It cited an increase in healthy beneficiaries under Medicare, which it said has lowered projected costs for that program.
CMS separately is delaying a risk assessment proposal that was set to take affect under ObamaCare.
The announcement comes after insurers spent millions on a public relations blitz seeking to head off the cuts, and after dozens of Democrats joined Republicans in calling on the administration to keep MA rates flat to avoid cutting benefits for seniors.
Monday’s announcement is “significantly better for health plans” than the initial proposal in February, CMS administrator Jonathan Blum said in a conference call with reporters.
“The policies announced today will provide improved benefits in Medicare Advantage and the Prescription Drug Plans while keeping costs low for Medicare beneficiaries,” Blum said. “We believe that plans will continue their strong participation in the Medicare Advantage program in 2015 and beneficiaries will continue to have access to a wide array of high quality and affordable Medicare health and drug plans.”
America’s Health Insurance Plans (AHIP), the nation’s largest health plans industry group, was among the most vocal critics of the proposed cuts, backing ads reminding Washington that “seniors are watching.”
The rates are also a victory for insurers and Republican lawmakers who lobbied hard to ward off any changes to MA payment rates, and for vulnerable Democrats, who flocked en masse to oppose the cuts, even though many of them have opposed the program in the past.
In February, the Obama administration argued that the proposed cuts would help strengthen the program -— an increasingly popular private alternative to traditional Medicare — and guard against waste.
White House officials had pushed back at criticism of the pending cuts, noting that Medicare Advantage’s enrollment has spiked to an all-time high since the passage of the Affordable Care Act, and that premiums under the plan have fallen by 10 percent.