Democrats Wrong Again

Published January 1, 2004

You’ve heard lots of talking heads complain about the new Medicare Reform Act of 2004. What you’re not hearing is the really good news–the free market is responding as predicted: Medicare HMO premiums are dropping like a rock.

Millions of seniors enrolled in private-sector Medicare HMOs are getting a big surprise: HMOs for the elderly are offering substantial rate cuts–between 36 and 64 percent–while increasing benefits.

Pacificare Health Systems Inc. in California announced premium reductions and enhanced benefits for most of its 700,000 enrollees in eight Western states.

Aetna announced it would use the higher reimbursement payments from the federal government to help many of the company’s 121,000 enrollees. Health Net Inc. made a similar announcement for 171,000 seniors. Pennsylvania insurer Highmark is slashing premiums by as much as 64 percent. The three largest HMOs serving the Massachusetts Medicare population plan to reduce premiums between 36 and 48 percent.

Cutting premiums isn’t the only cost savings. Private-sector insurers also are beefing up benefits by reducing or eliminating co-pays and deductibles and adding coverage for previously un-reimbursed medical treatments.

Many Republicans–and consumers as well–say private plans are more efficient than the traditional government-run Medicare program. While Democrats insisted private insurers would not save money for seniors, the actual decreases in private-sector insurance premiums prove otherwise.

IT’S YOUR HEALTH is written by Conrad Meier, senior fellow in health policy at The Heartland Institute. This program is produced as a public service by Radio America. Meier passed away unexpectedly on March 18, 2005.