Why are Medicare Advantage copays and out-of-pocket expenses rising?

Question from Nick: My Advantage Plan hospital co-pay is rising by more than 500% from one year to the next. My wife’s plan is also adding a $700 drug deductible next year that she did not have before. Many of my friends are losing their Advantage Plans as well. Why is this happening?

Answer: The reason is fairly straightforward. Over the past three years, nearly all Advantage Plan insurers have either lost money or earned only a very small profit. When that happens, companies typically shift more of their costs to consumers through higher premiums, greater out-of-pocket medical and prescription expenses, and fewer “extras” such as dental, vision, and over-the-counter allowances, or a combination of all of these changes.