"It is unacceptable that South Jersey's senior citizens are facing a 200% increase in the cost of their Medicare HMO, when our neighbors in the region are paying three to 10 times less for the same health coverage," said Andrews. "South Jersey's senior citizens on a fixed income cannot afford to pay $1,000 more than they were paying last year for health coverage.  These unwarranted price hikes are devastating to the 30% of the Medicare population in our region who have chosen to join a Medicare HMO."

Medicare HMO participants in South Jersey are now charged annual premiums which are $600 to $1,200 higher than Pennsylvanians receiving the same Medicare HMO coverage.  The insurance companies are making far more money from South Jerseyans, since HMOs are paid almost the same amount by Medicare to enroll South Jersey seniors as they receive for Pennsylvania residents who enroll.  On average, HMOs are reimbursed $68 less per year for South Jersey residents than for Pennsylvanians.  

Despite these nearly identical reimbursement rates, HMOs are charging exorbitant premiums to South Jerseyans when compared to the rates for the same Medicare HMO plan in Southeastern Pennsylvania.  For instance, one of Aetna/US Healthcare's Medicare HMO Plans now charges $85 per month to senior citizens living in the South Jersey suburbs on the western bank of the Delaware, while across the river, exactly the same health insurance plan costs only $30 or $40 per month.  Another Aetna Medicare HMO plan which cost South Jersey residents $30 per month in 1999 has been increased to $105 per month this year -- yet Pennsylvania residents only saw their premiums for the same plan go up from $0 to $10 per month.  

"The different areas of our metropolitan region have the same economy and identical health care options.  The insurance companies should not be allowed to raise prices so high, and they can't justify charging such vastly different rates," Andrews continued.  "In addition, the federal agency running the Medicare program is paying HMOs less to insure South Jersey senior citizens than they pay HMO's to insure seniors in Pennsylvania.  Both the insurance company pricing plan and the Medicare formula are unfair to South Jersey seniors, and I will fight to reverse this decision."

Each July, HMO's that choose to participate in the Medicare+Choice program must submit a proposal to the federal Health Care Financing Agency (HCFA), which runs Medicare, specifying the rates they plan to charge senior citizens to enroll in their plan.  Andrews today will formally petition HCFA to conduct an audit of Aetna/US Healthcare's Medicare HMO contract proposal from last year, in which the 2000 rate hikes were proposed.  The Congressman called on HCFA to find out the reasons that Aetna gave to justify the disparities in premiums for senior citizens in our region -- and to rollback these price increases on the basis of the flawed methodology contained in Aetna's proposal.  Andrews will also ask for Governor Whitman's assistance in encouraging the Medicare program to change the regional funding formula for South Jersey.  Under the rules governing the Medicare + Choice program, each State has the authority to petition the HCFA to change its regional funding formula.  

Finally, Andrews proclaimed his strong support for President Clinton's proposal to provide a prescription drug benefit to everyone on Medicare.  South Jersey's senior citizens have chosen to join Medicare HMOs primarily because the HMO plans offer prescription drug benefits -- only to be hammered with unexpected and dramatic premium increases this year.  The permanently solution would be to expand the Medicare program to provide an affordable prescription drug benefit for every senior citizen, not just those in Medicare HMOs.  Today's modern health care practices increasingly rely on prescription medicines as a crucial element of patient care.  Prescription drug costs are the fastest rising portion of the health care bill for senior citizens, consuming 34% of the overall cost, and on average, seniors are paying $100 each month in out-of-pocket costs.

Rates for the Aetna U.S. Healthcare Golden Medicare Plan:  
Plan Changes Effective January 1, 2000:

    1999 monthly premiums  2000 premiums
Medicare 5 Plan
 Philadelphia   0     0
 SE PA suburbs  0     10
 South Jersey   30     105

Medicare 10 Plan
 Philadelphia   20     30
 SE PA suburbs  20     40
 South Jersey    0     85

Medicare 10 Enhanced Plan
 Philadelphia   50     80
 SE PA suburbs  50     90
 South Jersey   35     110
 
 

Federal Government Payments to Insurance Companies per Medicare Enrollee
(HCFA's Monthly Capitation Payment for Medicare+Choice, by county of residence)

Camden County, NewJersey   $593.47 per month
Gloucester County, New Jersey $591.58 per month
Burlington County, New Jersey  $552.60 per month
     ---------------------------
SOUTH JERSEY AVERAGE:  $579.21 per month

Montgomery County, PA  $548.54 per month
Chester County, PA   $553.66 per month
Delaware County, PA   $626.24 per month
Bucks County, PA   $610.97 per month
     ---------------------------
SE PA SUBURBS AVERAGE: $584.85 per month

Philadelphia, PA   $747.35 per month