Many people on Medicare are concerned about future cuts to their plans.
In the face of rising medical costs, some recent earnings reports from insurance companies included statements from executives saying they are keeping a close eye on costs.
READ MORE: Will you lose your Medicare Advantage plan benefits?
It is worth taking note of what specific aspects of Medicare are being discussed in relation to these concerns.
Medicare Part A, funded primarily through payroll taxes paid by employers and employees, is generally premium-free for those who have paid Medicare taxes for at least 10 years.
Part B is funded through monthly premiums paid by beneficiaries and general revenue from the federal government.
Medicare Part C (called Medicare Advantage) is the source of concern.
Part C is offered by private insurance companies approved by Medicare. These companies receive payments from Medicare to provide Part A and Part B benefits, and beneficiaries typically pay additional premiums to obtain additional coverage.
In April, a Human (HUM) The earnings conference call included CEO Bruce Broussard, who issued a cautious outlook on the viability of its Medicare Advantage plans.
“As we look to the future, we recognize that the industry is going through a dynamic and challenging time that we must address,” Broussard said.
But he also added a statement about his confidence in Humana's ability to weather the storm.
“And while the current environment will create disruption for the industry in the near term, we continue to believe in the strong fundamentals and growth prospects of the MA industry and our ability to compete effectively in the MA market remains intact,” Broussard said.
The impact of rising medical costs and whether Medicare Advantage cuts will be necessary in 2025 is a matter of debate.
Reports of Medicare Advantage cuts may be exaggerated
Some have suggested that concerns about cuts to Medicare Advantage in 2025 are premature.
Author Marcia Mantell, writing for TheStreet's Retirement Daily, believes drawing conclusions based on statements by insurance company CEOs is overblown.
“There is nothing fundamentally different today than at any time in the past 50 years,” Mantell wrote. “Companies always have to find a way to manage rising costs and maintain profits. That's called doing business.”
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Mantell sought input from Michele Lepore, a Medicare Advantage expert who is a retired health insurance industry executive.
“It's certainly premature to link earnings reports to rising medical costs and conclude that profits are in jeopardy,” Lepore said.
Lepore made another point: Medicare benefits can't be cut just because insurance companies see costs rising. Medicare Advantage plans are required by regulations to provide all Medicare benefits.
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Medicare beneficiaries never lose Part A or Part B benefits.
Medicare Part A covers the costs of hospitalization, skilled nursing care, and some home health care services.
Part B covers doctor visits, preventive care, outpatient care, hospitals, and some home health care services.
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“The vast majority of costs a retiree would incur with an MA plan are for covered benefits,” Mantel wrote.
“They are specifically written into Medicare law and heavily regulated by the Center for Medicare and Medicaid Services“He added. “There is simply no option for a Medicare Advantage plan to opt out of the benefits offered. It MUST provide all the benefits of Original Medicare.”
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