January 6th, 2014

The privately run Medicare plans known as “Medicare Advantage” have been in the political crosshairs of the Obama White House. Even after facing steep cuts under Obamacare, the Advantage plans are now slated to take a brand new round of reductions in 2015. These new cuts will cause the private Medicare option to shrink further in the next few years, and pressure the insurance companies that offer them.

The latest cuts are the consequence of a slowdown in the overall growth of Medicare spending — some of it owing to reduced utilization of medical services as a result of the slack economy. The Medicare program recently told the private plans that, since per capita costs are trending lower than prior estimates, the feds are now assuming that Medicare Advantage will take another cut in 2015, on top of existing reductions.

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