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Profits Surpass Expectations for Medicare Insurers

Profits Surpass Expectations for Medicare Insurers

According to a recent feedback received from the congressional auditors, those health insurance providers who are attached to the Medicare program are reaping higher profits than targeted. In fact results have shown the companies have clocked profits $1.3 billion beyond their projections.

Under a specific program called the Medicare Advantage, insurers providing coverage on Medicare benefits, get paid by the federal government. These payments are based partly on the anticipated revenues and expenses. The Government Accountability Office has said that if the companies would have been more specific, they could have provided enhanced health benefits and lower monthly premiums and would have still made the projected profits.

GAO has made a detailed study of the MEDICARE Advantage Program of 2006, for which the complete figures have been available.

The analysis was requested by Rep. Pete Stark, D-Calif, who said that the find indicates that the government spends more on beneficiaries when they are under Medicare Advantage than in traditional Medicare. On an average difference is more than 13 percent.

Stark a regular of the program reiterated that the idea that the plans offer exceptional extra benefits with the overpayments is actually a misnomer. The analysis has once again substantiated that the overpayments only go on to make the profits.

The Associated Press was handed over a copy of the report which was given to Stark by the GAO.

Stark, also said that such legislation would be forwarded next year, which would lower government funding to the insurers. This thought has already been strongly advocated by the president-elect Barack Obama during his campaign.

However, the participants of the Medicare Advantage program have opined on the complete satisfaction of services that they are receiving and have also cited that this as the prime reason for high enrolment into the program in recent times.

In such a scenario, any initiative for payment cut-down might lead to either curtailment on existing benefits or increment in premiums for seniors in those plans, which would be detrimental for the beneficiaries in the plan as a whole. Out of the 45 million Medicare members, about three fourth are enrolled into the traditional Medicare, under which government pays the insurers a prefixed fee for particular services.

In their report, GAO has disclosed that health care providers under Medicare Advantage have generated total revenue of $ 50 billion during 2006. On the average against a projection of profit margin of 4.1 percent that was given to the federal government by the insurers, they have made a profit to the tune of 6.6 percent.

Moreover, against a projection of 87 percent of revenue being utilized for covering medical expenses only 83.3 percent has been done. This has clearly showed that coverage on medical expenses has also been less.

In response to the report, the federal government officials have said that insurers' projection for expenses have been done within a standard range keeping in mind the difficulty to make a precise forecast on medical trends and expenses therewith. It was also stressed that Congress fixed the structure from payment for Medicare Advantage with a view to provide a wide span of access to beneficiaries.

Jeff Nelligan, spokesperson for Centers for Medicare and Medicaid Services said that the payment structure was formulated by Congress to ensure a much broader access to Medicare Advantage Plans by the lower-income, rural and people from the minority sector.

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