Two private insurers, Blue Cross Blue Shield and United Healthcare, are leaving Vermont’s Medicare Advantage market next year, and a third, Humana, will only offer plans in a handful of counties. That’s according to data released this week by the Centers for Medicare & Medicaid Services.
For most Vermonters eligible for Medicare, that will leave them with only one option: traditional Medicare. Tens of thousands of residents will have to find new coverage before the end of year.
“Vermont's Medicare Advantage marketplace has collapsed,” Mike Fisher, Vermont’s health care advocate, said Wednesday. “There's no insurance companies offering a statewide plan.”
Medicare Advantage plans provide Medicare benefits through private insurers, who are paid a fee from the federal government for each beneficiary. About half of all Medicare-eligible Americans are now enrolled in the private plans, which were aggressively marketed to seniors as a way to get more benefits at a substantially lower cost.
What’s happening in Vermont is an acute version of a nationwide trend. After years of chasing growth in the Medicare Advantage market, insurers across the country are now abruptly pulling back plan offerings. Advantage plans were once dependably lucrative, but lower federal payments and high utilization rates have cut into those profits — and in some cases led to losses.
The state’s largest private insurer, the financially troubled Blue Cross Blue Shield of Vermont, has previously pointed to its Medicare Advantage offerings as a significant driver of its shortfalls. Vermont lost two other Medicare Advantage plans last year, and in a statement Wednesday announcing it, too, was now pulling out, Blue Cross said it hadn’t been able to handle the influx of business it received when others exited. Combined with escalating health care costs, Medicare Advantage market trends in Vermont were “unsustainable,” the company said.
Medicare Advantage plans have attracted scrutiny from regulators, Congress and the media for overbilling the government and denying care at high rates. So for consumer advocates like Fisher, the exodus of insurers from Vermont’s Medicare Advantage market is both good news and bad news.
Once you get on a Medicare Advantage plan, it’s hard to return to traditional Medicare if you’re unsatisfied with your coverage — unless your insurer drops you. Those who wanted out of Medicare Advantage anyway will have a smoother path back to the publicly run program.
But there’s a reason Medicare Advantage plans were attractive: They were affordable. Without secondary coverage, people on Medicare can face steep co-pays and deductibles. And while Vermonters can still buy private supplemental insurance, often referred to as Medigap plans, to defray those out-of-pocket costs, premiums are often “way too high for many Vermonters,” Fisher said.
It’s unclear how many Vermonters will be dropped by their insurers, although about 26,000 individuals were enrolled this year in Blue Cross’s Vermont Blue Advantage plan alone. The changes won’t impact employer-sponsored plans, only those shopping for coverage on the individual market.
The scale of the change could be problematic, according to Sam Carleton, the Vermont director for the State Health Insurance Assistance Program, which helps Vermonters navigate Medicare options.
“It's my worry when it all happens at once like this, we're not going to be able to serve as many people as maybe we normally would during open enrollment, just due to sheer volume,” he said.
His advice: Don’t ignore your mail, where you’ll soon receive notices from the Centers for Medicare & Medicaid Services and your insurer. And start looking into your options early.
Open enrollment starts Oct. 15 and ends Dec. 7, but people can start comparing plans now on Medicare.gov. And despite the government shutdown, individuals can still call the Medicare helpline at 1-800-633-4227.
