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Insurers abandon medicare HMOs
HARTFORD, Connecticut (The Hartford Courant) -- Nearly half of Connecticut senior citizens in Medicare HMOs and more than 711,000 nationally will be forced to find other health insurance for next year as Aetna, Anthem Blue Cross and other companies Thursday announced massive withdrawals from the troubled business. More than 52,150 seniors in Connecticut will be dropped Dec. 31 as HMOs across the nation abandon areas where they're losing money. In addition, Medicare HMOs expect to raise premiums and co-pays and cut benefits again for next year in their remaining regions, likely making the plans unaffordable or unattractive to thousands more nationwide. The exodus steps up political pressure, raising the likelihood that Congress will approve bigger government payments, industry officials say. That might convince companies to reconsider at least some of the planned withdrawals, which are prompted by the wide variance in reimbursement from county to county.
Aetna, the nation's largest health insurer, said Thursday that it will quit the Medicare HMO business in its home state of Connecticut where it has 14,780 members. It will also leave 10 other states and parts of three more. Anthem Blue Cross and Blue Shield of Connecticut will drop 24,074 seniors in the four Connecticut counties where it sells Medicare HMO plans - Hartford, Litchfield, Fairfield and New Haven. But it will continue selling traditional insurance that supplements the government's regular Medicare program. California-based Foundation Health Systems plans to discontinue Medicare HMOs in 18 counties of six states. That includes Middlesex and Litchfield counties in Connecticut, which have 2,684 seniors in Medicare plans of the company's Physicians Health Services (PHS) subsidiary. CIGNA Corp. previously announced it would drop about 104,000, or two thirds, of its members nationally, and quit Connecticut where 10,700 of those Medicare members live. "Not a pretty picture"The massive withdrawals, which surprised some federal and state officials with their magnitude, are expected to touch off confusion, anger, and disappointment among the elderly as in previous years. The HMOs, which have enrolled 6.2 million seniors nationwide, are especially popular because of their prescription drug coverage. "It's not a pretty picture,'' said Nancy Krodel, an official with the Eastern Connecticut Area Agency on Aging. "People are going to be making a choice between `are we going to eat this week, are we going to put gas in our car, are we going to heat our home, or are we going to buy prescription drugs.''' Seniors who are dropped can join another Medicare HMO if one is available in their area, but they might have to switch one or more doctors. Instead, seniors can return to the traditional Medicare program. If they go back to Medicare, they can buy private supplemental insurance ("Medigap'') to fill in the gaps such as deductibles. But some say they cannot afford Medigap premiums, which are typically higher than what the HMOs charge. Supplements with drug coverage run $2,000 a year and higher in Connecticut, and seniors with health problems might not qualify for them. Thursday's announcements will leave Connecticut with two more counties - Middlesex and New London - without any Medicare HMO as of Jan. 1, in addition to the already-orphaned Windham County. Fairfield, Litchfield, and Tolland will each have only one Medicare HMO. "Underfunded and overregulated"A survey of many large Medicare HMOs released Thursday by the American Association of Health Plans found they plan to drop 711,000 members at the end of the year. But the trade group expects that will rise to 800,000 when all companies are factored in - more than the number dropped during the past two years combined. About 327,000 seniors were dropped last Dec. 31, and 400,000 at the end of 1998. "Washington has failed these beneficiaries,'' said Karen Ignani, president and chief executive of the association. "This program has been underfunded and over-regulated.'' Aetna, which is dropping 355,000 seniors nationally - about 54 percent of its Medicare HMO membership, is losing roughly $60 million to $70 million a year on the overall business. In the places it's quitting, Aetna is losing about $130 million pre-tax, which is only partly offset by profits it's making in the regions in which it will remain. Aetna's decision "comes as a real shock to me,'' said Tom Bousquet, 82, of Windsor, a satisfied Medicare HMO member of Aetna for about five years. "I'd expected they'd weed us out by raising premiums, so gradually we'd die off or drop out,'' said Bousquet, a Pratt & Whitney retiree. "They don't seem to give a damn.'' However, Aetna Chairman William H. Donaldson said Thursday, "The decision to exit certain Medicare markets was reached with great reluctance, but was made after an exhaustive review of alternatives, such as significant benefit and premium modifications.'' The increase in government reimbursements, generally capped at two percent, is inadequate and not keeping up with medical costs, Donaldson said. He has met in recent months with HSS Secretary Donna Shalala and members of Congress, trying to drive home the need for an overhaul of the program. Physicians Health says its health care costs for Medicare HMOs are rising about six percent a year, far outpacing the two percent rise in government payments. In addition to the gap between health costs and revenue, HMOs complain that federal rules for the program have increased their administrative costs. Anthem Blue Cross says over the past three years it has lost $9.5 million on the Medicare HMO business, and the hospital-physician groups that share the financial risk have lost $15.5 million. The withdrawal, the company said, "is a particularly difficult decision for Anthem, considering our deep and historic commitment to serving the health care needs of Connecticut citizens, particularly its older citizens.'' Another factor in Anthem's decision was the fear of losing more hospitals and doctors from its Medicare Blue network, said company spokesperson Paula Laudano. Waterbury Hospital is dropping out of that network as of Sept. 1. The AAHP survey found the same concern among other HMOs too, as physicians find they fare better financially under traditional Medicare. Hartford-based MedSpan plans to continue Medicare plans in the four counties it's currently in - Hartford, Litchfield, New Haven and Tolland. MedSpan can take on some new members, but "we have capacity limits,'' said MedSpan President Kevin Kelly. "So we're not in a position where we can take everybody in'' who is dropped by other companies. Trumbull-based Oxford Health Plans will keep its Medicare HMO program in New Haven County, but withdraw from eight counties in New Jersey. ConnectiCare, which currently serves Hartford and New Haven County Medicare members, said Thursday it intends "to stay in selected markets in Connecticut,'' but wouldn't elaborate. The withdrawals turned up the political heat Thursday as U.S. Rep. Sam Gejdenson, D-2nd District, blasted insurers for their willingness to abandon any region that's not profitable enough. "This house of cards developed to provide health care for seniors just isn't doing the job,'' Gejdenson said. "The idea that people in their 70s and 80s and 90s have to look for a new insurance policy every year is criminal.'' RELATED STORIES: For more Local news, myCNN.com will bring you news from the areas and subjects you select. More Connecticut Resources: WTNH Connecticut CNN/SI City pages: New Haven, CT Storrs, CT West Haven, CT
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