Bob’s Journal for 10/10

Medicare Advantage Plan Cutbacks for 2025 Become Clearer; Latest Policy Change Deals Another Blow

Medicare Open Enrollment begins Oct. 15 and will fully reveal how much plans and their pricing will change for 2025.

Preliminary data from the Centers for Medicare and Medicaid (CMS) give us an early indication of how significant the changes will be. There will be 6.6% fewer Medicare Advantage plans with prescription drug coverage available in 2025 than 2024.

UnitedHealth Group is offering 5.4% fewer plans, and Humana will have 2.5% fewer plans. An average of 34 Advantage plans will be offered in each county in 2025, compared to 43 in 2024.

Emphasizing a bright spot, the CMS said the average monthly premium on Advantage plans will fall to $17.00 in 2025 from $18.23 in 2024.

But premiums are only part of the package. Beneficiaries need to look at total costs and benefits.

Advantage plans are popular partly because they offer supplemental benefits, such as dental and vision care, gym memberships and more. They also bundle prescription drug coverage in the benefits package.

Because CMS has taken measures to reduce its costs and make Advantage plans less profitable for insurers, many Advantage plans are likely to offer fewer supplemental benefits in 2025 than in 2024.

In addition, premiums aren’t the only cost for beneficiaries. Lower premiums can be offset by higher deductibles and copayments.

Advantage plans also can reduce other benefits, such as the number of prescription drugs covered or the cost of the drugs to beneficiaries.

A potential change that a beneficiary isn’t likely to learn about until 2025 progresses is that an Advantage plan can deny coverage of more procedures and services that were recommended by doctors, forcing patients to appeal the decisions or forego the treatments.

It’s more important than ever for Medicare beneficiaries to study the details of their coverage options during the upcoming Open Enrollment. Be sure you know what’s changing from 2024 to 2025.

In the past, beneficiaries haven’t done a good job shopping around and comparing Advantage plans. During Open Enrollment in 2021, 65% of Advantage plan members didn’t compare plans, and 43% didn’t even check the changes made to their current plans, according to the Kaiser Family Foundation.

Beneficiaries often say they have difficulty understanding and comparing plans. That’s why it’s a good idea to work with one or more local insurance agents who focus on the Medicare policies and plans available in your area. Seek agents who research many different insurers instead of agents tied to one or two insurers.

Another option is the SHIP program, a federally funded program available through state governments. SHIP has trained volunteers who guide beneficiaries through their options and help them make decisions. SHIP is free and open to all Medicare beneficiaries.

Expect to have to do the analysis again next year. Some Advantage plans are likely to be less attractive in 2026.

That’s because CMS tweaked its quality ratings of plans. In the 2025 ratings data, Humana will have only 25% of its members enrolled in plans rated four stars or higher. In 2024, the percentage was 94%.

CMS pays bonuses to sponsors of Advantage plans with higher ratings, so Humana will receive less money from Medicare.

How Money Affects Happiness

It’s been interesting reviewing the various studies on the relationship between money and happiness over the last few decades.

The early studies generally found that people at every income level believed a bit more money or wealth would make them happier.

At almost every income or wealth level, people believed that one-third more income or wealth would make them happy or satisfied.

Later, some studies concluded that it wasn’t really money or wealth that made people happy. How people spent the money was what mattered.

Those who spent on things found the happiness from more money was temporary. After a period of time, they believed they needed even more money to be happy.

But those who spent money on experiences were more likely to have sustained happiness.

After that, research explored the idea that people need a certain level of income to be happy. Additional income above that level increased happiness less, and progressively less as the income increased.

Some researchers said that happiness increased until income reached about $75,000. After that, more income didn’t increase happiness much. (The $75,000 was in 2010 dollars. It now is about $110,000 or more.)

But subsequent research said that idea was wrong. Happiness or satisfaction rose as income increased above that level.

The most recent research, reported in The Wall Street Journal, found that at every level of income, happiness increases as income increases.

I think that brings us back to the conclusions of the early research.

People generally aspire to have more money and imagine the benefits that would come from it. Some people want to buy more things. Others want the security or options that would come with more wealth.

When they receive some additional income, happiness increases.

If income keeps increasing over the years, the person is likely to at least maintain a level of happiness. But if income stagnates, the income that made the person happy a few years earlier might not do the job today.

Of course, money isn’t the only factor in determining happiness or life satisfaction. Money is a way to achieve some goals. And, no matter what the averages say, each person is different. Money and things mean more to some people than to others.

Is the Florida Housing Boom Ending?

Migration steadily increased Florida’s population for decades. The steady stream turned to a surge during the pandemic. That might have brought Florida migration to its peak.

Recent data indicate fewer people are moving to Florida, the housing market is cooling off and people are rethinking the goal of moving to Florida.

Florida was the fastest-growing state from 2021 to 2023 by some measures.

Florida’s home prices doubled from 2017 to 2024. But home prices have been flat since March 2023, according to The Wall Street Journal. The inventory of homes for sale is increasing while the number of homes sold and sale prices stagnate.

There are several reasons Florida’s housing market slowed.

Rising home prices and mortgage interest rates mean fewer people can afford the homes.

The population increase of recent years made the state more crowded and congested, making the state less attractive to some than it was before the surge.

Major weather events, such as hurricanes, battered the state in recent years. The storms make life harder and more expensive.

The storms and higher home values also increase insurance premiums. Some major insurers stopped offering coverage in the state. Others significantly increased premiums, with some premiums rising more than 400% over five years.

Flood insurance also is much less affordable. Some Florida homeowners report going without insurance because the premiums are so high.

Another factor stems from the collapse of a high-rise condominium building a few years ago.

The building was decades old, and its foundation deteriorated. That caused the building to collapse.

The legislature subsequently enacted a law requiring older condos to be inspected and their foundations repaired, if warranted. That has led to special assessments of condo unit owners in many older buildings. Some of the assessments were six figures. Fewer mortgage lenders will lend to people who want to buy in the buildings.

Perhaps this is only a pause. Maybe prices surged ahead of fundamentals the last few years. It will take time for balance to be restored.

But this also could be an inflection point when more people decide the benefits of Florida no longer outweigh the disadvantages.

The Data

In September, the Small Business Optimism Index from the National Federation of Independent Business (NFIB) rose but was below its 50-year average for the 33rd consecutive month. The index was 91.5 in September, up from 91.2 in August.

The business owners reported being more uncertain than ever. A subindex, the Uncertainty Index, increased 11 points to 103, its highest level ever.

The ISM Services Index increased to 54.9 in September, its highest level since February 2023, rising from 51.5 in August.

The PMI Services Index was 55.2 in September, down from 55.7 in August.

The PMI Composite Index for the economy fell to 54.0 in September from 54.6 in August.

Factory orders declined 0.2% in August after rising 4.9% in July. Excluding the volatile transportation sector, factory orders declined 0.1% in August, following a 0.3% increase in July.

Consumer credit outstanding increased in August at an annualized rate of 2.1%.

Revolving credit, which is mostly credit cards, decreased at a 1.2% rate, while nonrevolving credit (mostly student and vehicle loans) rose 3.3%.

Last week’s Employment Situation reports found that 254,000 jobs were created in September, up from 159,000 jobs in August. September’s job growth was the highest in six months and above the 12-month average of 203,000.

Also, the number of jobs created in July and August was revised higher by a total of 72,000 jobs.

Average hourly earnings increased by 0.4% in September and 0.5% in August. The 12-month increase in average hourly earnings was 4.0% through September and 3.9% through August.

The unemployment rate fell to 4.1% in September from 4.2% in August.

New unemployment claims rose by 6,000 to 225,000 in the latest week.

Continuing claims, which lag a week behind new claims, decreased to 1.826 million from 1.827 million.

The Markets

The S&P 500 rose 0.80% for the week ended with Tuesday’s close. The Dow Jones Industrial Average lost 0.17%. The Russell 2000 fell 0.14%. The All-Country World Index (excluding U.S. stocks) dropped 1.17%. Emerging market equities were unchanged.

Long-term treasuries lost 3.55% for the week. Investment-grade bonds fell 1.72%. Treasury Inflation-Protected Securities (TIPS) declined 1.14%. High-yield bonds decreased 0.53%.

On the currency front, the U.S. dollar gained 1.38%.

Energy-based commodities increased 1.87%. Broader-based commodities lost 1.03%. Gold declined 1.33%.

Bob’s News & Updates

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