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Letter to the Honorable Mike Crapo 1 (May 2009)

handle is hein.congrec/cbo9368 and id is 1 raw text is: CONGRESSIONAL BUDGET OFFICE Douglas W. Elmendorf, Director U.S. Congress Washington, DC 20515 May 18, 2009 Honorable Mike Crapo United States Senate Washington, DC 20510 Dear Senator: As you requested, CBO is providing additional information regarding the Medicare Advantage (MA) payment options discussed on April 29, 2009, during the Senate Committee on Finance's meeting entitled Delivery System Reform. The Committee discussed four options that would change how the MA benchmarks for federal payments are set. Projected Medicare Advantage Enrollment and Costs under Current Law Under current law, CBO projects that the number of Medicare beneficiaries enrolled in Medicare Advantage plans will grow from 10.6 million in 2009 to 13.9 million in 2019. We also project that the amount by which payments to plans will exceed their bids will grow from an average of $87 per member per month in 2009 to $135 per member per month in 2019. Medicare Advantage plans use those additional payments to provide additional benefits to their enrollees in the form of coverage of benefits that are not covered by Medicare, reduced cost sharing for Medicare-covered benefits, or rebates of all or part of the Part B or Part D premium. CBO does not have a basis for projecting the distribution of additional benefits across those categories. You asked for data on plan availability in rural and urban areas. CBO currently is only able to categorize the effects on spending and enrollment for various areas based on whether plans' bids currently are above or below per capita costs in the fee-for-service (FF S) sector. Those areas are correlated with, but not identical to, urban versus rural status. Just under half of MA enrollment is in areas where plans' bids are below FFS costs, which tend to be urban areas. Bids in rural areas tend to be higher than FF S costs.

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