The current Medicare+Choice program, enacted in the Balanced Budget Act (BBA) of 1997, attempted to expand the variety and geographic availability of private sector health plans for the Medicare population, while reducing federal Medicare spending.

In reality, payment and oversight changes included in BBA have inhibited the expansion of the private sector’s role in the Medicare program and created additional inequities for participating plans, providers, and enrollees in different geographic regions of the country.

As a consequence, there has been a dramatic reduction in the number of participating plans and the additional benefits that M+C plans were once able to offer enrollees. Medicare+Choice has lost much of its attraction for both the plans and health care providers, as well as Medicare beneficiaries

As of March, 2003, 11% of the Medicare population’s 4.5 million enrollees were enrolled in M+C plans. In FY2002, M+C spending accounted for 15% of total Medicare spending ($35 billion).

The starkest indicator of the damaging impact of BBA payment and oversight changes on the Medicare+Choice program is the number of Medicare beneficiaries who have lost access to their M+C plans due to plan withdrawals.

Since enactment of the BBA, the trend of M+C plan withdrawals has been consistent, reaching its peak in 1999 when 934,000 Medicare enrollees were affected. The rate of withdrawal has since slowed, affecting 536,000 enrollees in 2002, and 198,000 enrollees in January-March 2003.

In 1998, the first year of implementation of BBA, 74% of Medicare beneficiaries had access to a Medicare+Choice plan. By 2002, 60.5% of the Medicare population had such access.

At the same time, the availability of zero premium plans has been reduced and the value of additional M+C benefits has declined and is expected to continue to decline. In 1999, 61% of the Medicare population had access to zero premium plans. By 2002, that percentage was reduced to 32%.

Out-of-pocket payments are expected to continue to rise, while the number of plans offering prescription drug coverage and the value of such coverage are expected to decline.

Between 1997 and 2002, average per enrollee payments to M+C plans increased by a cumulative total of 16.6%, while average per enrollee premium increases for plans in the Federal Employees Health Benefits Program (FEHB) increased a cumulative total of 59.7%.

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