Harvard hospital says health insurance companies avoid low-income Medicare patients Posted: November 3rd, 2010

Researchers from Massachusetts General Hospital, Harvard's largest teaching hospital, have discovered that health insurance companies are eliminating coverage options for a portion of the Medicare Part D market. Low-income beneficiaries are more often being forced into alternate plans as insurers raise premiums and opt out of the subsidized segment of the Medicare program.

Medicare Part D offers prescription drug coverage to seniors and individuals with certain disabilities. The plans are offered by private insurance companies with both beneficiaries and the government covering a portion of premiums. For low-income beneficiaries, Medicare pays out-of-pocket costs and assigns these individuals to Part D plans with low premiums.

While the government increases reimbursement payments by 8 percent for each fully subsidized patient and 5 percent for partially subsidized patients, the Harvard study finds that this is little incentive for companies. According to the report, the actual cost of coverage for fully subsidized patients is 21 percent greater than that of unsubsidized patients.

Now, it appears that insurance companies are purposely increasing their premiums to avoid being assigned low-income, high-cost patients by the government. The report authors recommend increasing the subsidy amount or changing the risk adjustment approach to address the issue.