Medicare minus choice: the impact of HMO withdrawals on rural Medicare beneficiaries

Abstract

A disproportionate share of the Medicare beneficiaries who lost coverage as a result of recent health maintenance organization (HMO) withdrawals have been from rural areas. Rural beneficiaries are less likely than urban beneficiaries are to have another Medicare+Choice (M+C) option. We surveyed a nationwide random sample of 1,093 rural beneficiaries to assess the impact of HMO withdrawals. A high proportion of beneficiaries ended up without any coverage beyond traditional Medicare; on average, beneficiaries experienced significant increases in premiums; and the proportion of beneficiaries with prescription drug coverage decreased significantly. These results raise questions about whether the federal government should encourage plans to enter rural markets where they will be the only M+C plan and where their withdrawal could have negative consequences for enrollees who lose coverage.