WASHINGTON—The Obama administration said Tuesday it denied rate increases and benefit cuts sought by some privately run Medicare plans.
The move is a sign of the toughening regulatory climate for health insurers that could prompt some of them to leave the Medicare market in coming years.
The majority of people 65 and over get their Medicare benefits directly from the government. But some 11 million people are in Medicare Advantage, where a private insurer provides coverage. Medicare Advantage plans may supply additional benefits, such as gym club memberships, while giving people a narrower choice of doctors.
In June, federal officials received 2,100 bids from private insurers hoping to offer Medicare Advantage plans next year. Officials said Tuesday they denied rate increases and benefit cuts in 298 cases. As a result, they said, Medicare Advantage premiums will be 1% lower on average in 2011.
The plans, on average, carry higher co-payments and deductibles. Taking those into account, the core benefit package will cost seniors an extra $13 per month, the government said, at a time when many Americans are facing double-digit rises in their health-insurance costs.
Officials said the government blocked insurers from taking excessive price increases or boosting their profits.