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The $1.8 trillion budget for 2001 agreed to by President Clinton and Congress includes higher Medicare payments aimed at stemming the exodus of HMOs from Medicare. In the last three years, Medicare HMOs have dropped nearly two million Americans from their rolls, leaving many seniors without prescription drug coverage. Another nearly one million seniors face being bumped from HMO plans in the coming year. PacifiCare Health Systems Inc., the nation''s largest provider of Medicare health plans, announced fourth quarter losses only two weeks before the budget passage. Citing low federal reimbursements and higher medical costs, the company said it will cut nearly 550 jobs, more than half of which are in sales of its Medicare managed care plans. This move followed the company''s decision in November to freeze new membership enrollment in its Medicare program in 41 counties in five western states. Meanwhile, Aetna, the nation''s largest health insurance company, announced December 18 that it will close HMOs that insure 340,000 Medicare beneficiaries as part of a plan to reduce its 19 million customer base by two million customers over the next year. Other insurers that are pulling out ofthe Medicare HMO business include Cigna Health Care for Seniors, and Kaiser Permanente. The budget agreement allocates approximately $233 billion to Medicaid and Medicare, and provides $35 billion over five years to improve coverage for Medicare beneficiaries and to increase payments to hospitals, home health agencies, nursing homes and managed care plans.
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