Medicare beneficiaries who choose HMOs are on average poorer than those who remain in traditional fee-for-service, and they join the HMOs because of added benefits or lower premiums, according to a study done by a bipartisan pair of polling firms for the American Association of Health Plans.
The results could affect the bidding process in two Medicare managed-care competition demonstration projects (See related story, p. 14).
According to the survey, 69% of seniors enrolled in Medicare HMOs have incomes below $30,000 a year, compared with 51% of seniors in traditional fee-for-service.
The survey of Medicare beneficiaries in four states-Arizona, California, Florida and Texas-also found that the percentage of beneficiaries over the age of 75 enrolled in HMOs (38%) was nearly identical to that of beneficiaries over 75 who are in fee-for-service plans (40%).
The fiscal 1998 White House budget released last week would cut projected payments to managed-care plans by $34 billion over a five-year period by reducing the rate paid to plans and deducting graduate medical education and disproportionate-share payments from HMO reimbursements. The White House justified those reductions, which make up more than one-third of the total savings on Medicare, based on other studies showing that seniors who enroll in managed-care plans tend to be younger and healthier than those in fee-for-service plans.
The study found that more than three-quarters of those seniors in HMOs chose to move from traditional fee-for-service coverage because the plan offered more benefits or had lower premiums. By law, HMOs must plow back any excess reimbursements to beneficiaries in the form of increased benefits, such as outpatient prescription drugs or lower premiums.
But while most of the seniors say they joined HMOs because of the lower cost or better benefits, 46% said they would be likely to move back to fee-for-service plans if the HMO began charging higher premiums. And 34% said they would go back if their HMO no longer provided outpatient prescription drugs.
The survey was prepared by the Democratic firm of Peter D. Hart Research Associates and the Republican firm of American Viewpoint. More than 800 Medicare beneficiaries were surveyed.