Popular Medicare Advantage plans could face cuts

BY Ricardo Alonso-Zaldivar, Associated Press  February 21, 2014 at 6:18 PM EDT

WASHINGTON — The Obama administration says cuts to Medicare Advantage plans are on the table for next year.

The private insurance alternative is popular with seniors, and the insurance industry is fighting back in an election year.

The administration says costs per person in the private plans will grow more slowly in 2015. Analyst Matthew Eyles of Avalere Health estimates a reduction of 1.9 percent.

The plans serve nearly 16 million people, about 30 percent of Medicare beneficiaries.

The administration says insurers don’t need to be paid as much to turn a profit, because the growth of health care spending has slowed dramatically.

But insurers say they’ll be forced to pass on higher costs to seniors, and some plans may drop out.

Final rates could change when they are released April 7.