Aetna cutting Medicare HMO coverage

NEW YORK -- In an effort to cut its losses, Aetna Inc. says it plans to stop offering HMO coverage to seniors in several cities next year.

Aetna, the nation's largest health insurer whose stock has slumped in recent months, said a ''substantial'' number of its 670,000 Medicare health maintenance organization members will be affected.

The Hartford, Conn.-based company said Thursday it will disclose which cities it will exit on July 1, when it is required to inform the federal government. The members are located mainly in the Northeast, California and Texas.

In 1999, about 62,000 Aetna Medicare HMO members had to find a new health plan or return to the traditional Medicare program after the company left several major markets. Another 17,000 Aetna members were displaced this year.

Aetna is one of several large HMOs to curtail its Medicare business in the past two years because they say the federal government no longer pays them enough.

Since 1999, the exodus of health plans from Medicare has affected more than 700,000 Medicare beneficiaries.

Medicare HMO payment rates vary by county, which explains why plans are more anxious to serve members in South Florida than northern Minnesota.

Several competing HMOs, including Foundation Health, Pacificare and United Healthcare said Thursday they were still deciding whether to leave any Medicare markets next year. A Foundation official said she did not expect any major withdrawals in 2001.

Even many HMOs that have remained in the Medicare business have raised premiums, and curtailed benefits such as putting a yearly cap on coverage for prescription drugs.

In the mid-1990s, seniors in many parts of the country flocked to HMOs because they offered low or no premiums and offered benefits not available in traditional Medicare, such as coverage of prescription drugs and hearing aids.

But the growth of Medicare HMOs has flattened in the past few years after Congress cut the growth in payments to the plans as part of their 1997 agreement to balance the federal budget.