The feds have proposed paying a little more to insurers participating in Medicare Advantage in 2017.

The Centers for Medicare and Medicaid Services announced a proposed rate hike of 1.35 percent for 2017, an increase that a CMS official told the Wall Street Journal represented “modest but stable growth” for insurers that offer plans through the increasingly popular private sector version of Medicare.

CMS explained that the increase was mostly geared towards covering anticipated increases in the cost of health care.

In a statement, Marilyn Tavenner, CEO of America’s Health Insurance Plans, did not indicate whether she believed the proposed rate hike was big enough, but emphasized the importance of supporting the program.

“It's critically important that the agency finalize policies that ensure the long-term stability and continued growth of the program for millions of beneficiaries who depend on Medicare Advantage for their coverage,” she said.

Medicare Advantage has grown steadily in the 18 years since its creation, as a larger percentage of the ever-growing population of U.S. retirees is opting for the alternative to traditional Medicare. The growth makes the Medicare market irresistible to insurers, despite the fact that the federal government cut $150 billion out of the program as part of the Patient Protection and Affordable Care Act.

In contrast to the relatively small, politically-vulnerable PPACA marketplaces, Medicare remains a sure bet for insurers. It’s a huge market that few politicians have devised any meaningful steps to dismantle. Furthermore, attempts to significantly alter Medicare, including through shifting from a defined benefit to vouchers, would very likely be to the insurers’ advantage.

Instant Insights /

Feds propose increased rates for Medicare Advantage

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