COLUMBIA — Four years ago, Dixon Rogers, who lives in Fayette, was told by the government he could either switch from traditional Medicare to Medicare Advantage, or he could pay a penalty. He needed the coverage for prescription drugs.

A rural resident who gets Medicare because of a disability, Rogers, 59, signed up through Humana in 2005. That was a few months before Medicare started covering prescription drugs as part of former President George W. Bush’s health reform.

These days, he's no great fan of Medicare Advantage, a program in which the government pays private insurers to manage Medicare benefits for members.

“Humana pays for fitness programs and all the fancy stuff; that’s great, but if I have to drive 30 to 40 miles to get that, it’s not great for me,” Rogers said. “Even Columbia is not local to me.”

The end result is that he rarely uses extra benefits that Medicare Advantage plans often offer to attract customers.

When Congress created Medicare Advantage in 1997, the idea was that insurance companies could provide the benefits of traditional Medicare more efficiently and at a lower cost.

Since then, the overall costs for Medicare have skyrocketed for the government, which has led to cost increases for some Medicare recipients.

Health care costs to the government are expected to reach $2.5 trillion this year, according to Centers for Medicare and Medicaid Services. One of the contributing factors to increasing program costs is subsidies paid to health insurance companies.

The Department of Health and Human Services says the federal government pays, on average, 14 percent more to private insurance companies for providing Medicare Advantage coverage than what it pays for other Medicare programs. Because the overall program costs have gotten so high for the government, Medicare Advantage is driving up costs for everyone on Medicare.

"Some of the Medicare Advantage companies are not delivering what they had promised to do in prices," said Prof. Kristofer Hagglund, associate dean of health policy and academic affairs in the MU School of Health Professions*.

The increased costs will translate to an additional $3.60 per month for each Medicare beneficiary in 2010, according to the Department of Health and Human Services, or about $43.20 more for the whole year.

That will affect the 961,308 Missourians on some form of Medicare, according to a report from the Kaiser Family Foundation.

The report attributes the higher Medicare program costs to "excessive government subsidies" that are being given to private insurance companies. The report advocates for elimination of these subsidies.

Full story