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Kaiser will start charging Medicare members a monthly premium

Kaiser Permanente has told its nearly 800,000 Medicare members that they will have to start paying a monthly premium beginning Jan. 1, 2001.

The news follows recent permission from the federal Centers for Medicare & Medicaid Services (CMS), formerly the Health Care Financing Administration (HCFA), for the nation's largest nonprofit insurer to begin charging monthly premiums ranging from $20 and $50, according to Kaiser spokesperson Matthew Schiffgens. Kaiser has 8 million members in 11 states and the District of Columbia.

The move should not come as a surprise to Kaiser's Medicare beneficiaries, Schiffgens says. "There has been a great deal of communication on this issue with our members," he says.

Kaiser announced four months ago that it would seek CMS's approval to start charging the monthly premiums because CMS's annual 2 percent increase in Medicare reimbursement payments wasn't keeping pace with the insurer's claims experience and the medical inflation rate.

Premiums will vary by region, according to Schiffgens, but Medicare members in the Mid-Atlantic states, most particularly those who live in certain counties in Ohio and northern Virginia, will pay more because of their rural location.

Rural counties have been hardest hit by the exodus of more than 115 health insurers from the Medicare+Choice HMO market. Beginning Dec. 31, 2000, nearly 160,000 beneficiaries will be left without any access to Medicare managed care plans where they live.

Yet Kaiser's plan to begin charging premiums could all be undone when Congress returns from its break on Nov. 13, 2000. If legislators pass spending bills to put more money into the Medicare system, then all the Medicare HMO health insurers who contract with CMS will have to re-file with the agency according to the new rate information.

"It's an administrative procedure that would be welcomed," Schiffgens says. "It's not often you find more money to spend on your beneficiaries."

This year's third quarter was the first in three years that Kaiser has seen a positive cash flow. The insurer earned $180 million in this year's third quarter. By contrast, it lost $29 million in the same quarter last year.

Kaiser credits the turnaround to divesting itself of its money-losing operations on the East Coast, cutting administrative costs, and, like insurers nationwide, raising premiums.

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