Tuesday, December 6, 2022

Medicare Advantage: OK, it's bad for the country, but what about for me?

Among others (see a recent discussion by Dr. Donald Frey), I have written about the problems with Medicare Advantage, also known as Medicare “Part C”  ("Private Equity": Profiteers in nursing homes, Medicare Advantage, DCEs, and all of healthcare, Sept 16, 2022 and Medicare Advantage plans, CMS, and providing high-quality care to -- and care for -- all people, Nov 21, 2015.) We have all observed that while such plans might benefit some individuals, they are a bad thing societally and in terms of overall cost. They are over-subsidized by the government, with that subsidy going to profit, not to you. Essentially, they are based upon the idea that privatization is a good thing, a concept often based on the erroneous idea that privatization is efficient and saves money. Well, in general, it does make money. For the private contractor.

However, lately I have spoken with several friends and relatives, some of whom have read these blogs, who are wondering if they might be people for whom a Medicare Advantage (MA) plan could be good. So I thought I would write about some of the considerations in making a decision about initially enrolling in or changing to or from MA or Traditional Medicare (TM). 

The first thing to remember is that most MA plans are run by profit-making insurance companies (some are still non-profits, although they often act much like for-profits). This informs all the rest of it. They take your (or usually the government’s, thus also yours) money and enroll you in a plan that is basically an HMO, with many of the same advantages and disadvantages.  The advantages including covering most or all of the cost of your care (TM only covers 80%) -- when the MA plan decided that it will it cover it at all. MA plans also come with extra perks or benefits that TM does not, e.g., dental, vision, hearing – sometimes, although these benefits are usually quite minimal. The disadvantages to the individual are mainly two: limited networks and discretionary coverage. Limited networks mean that only some doctors and hospitals are covered fully, and if you use others (“out-of-network”) they cover less (and you pay more); in some cases, they cover nothing. It can also lead to “surprise medical bills” when you go to a hospital in your network, and receive care from a doctor in your network, but also receive care from doctors not in your network. They can be from an ER or anesthesiology or radiology group with which the hospital contracts, or the assistant surgeon who is not in network even though your primary surgeon is. Politicians talk a lot about addressing this. (They talk about a lot of things.) Also, of course, such networks are usually geographical, and you may not be covered if your are in a different area except for (what they, not you, define as) an emergency.

Even if politicians actually get it together to make such surprise medical bills prohibited, it leaves the main disadvantage with MA – that they are mostly run by insurance companies and don’t always cover what you think they should or even what you thought that they said they would. They may cover a procedure sometimes, but not now, or for you. They might argue that it is not medically necessary (and maybe it isn’t) but it can also often be denied on a technicality (you didn’t tell us you had hay fever as a child!). Like health insurance companies always do, MA can also routinely issue denials. Even if they may eventually cover the bill, it can take a lot of appeals, and cost time and effort, and they (correctly) think that a lot of folks won’t go to all that trouble. They often require prior authorization – your doctor has to ask their permission to do something -- and it may take a long time for that approval to come, if it ever does. And you may be getting sicker. The things that are most often denied or delayed are, unsurprisingly, the most expensive things. Among those expensive things are surgery and cancer treatment. Delays in receiving those can be damaging to your health.

In contrast, TM covers what it covers, for everyone who has it, wherever they are (as long as the doctors and hospitals accept Medicare, which the vast majority do). It does not underwrite, and does not make decisions about which TM recipients can get a treatment. It has a schedule for what it pays, not based on what the hospital charges, and it pays 80% of that for inpatients. So, for example, a hospital might bill $10,000 for a certain procedure but the Medicare schedule says it pays $5,000. It pays 80% of that ($4,000) and you are on the hook for the other $1,000 (which is why TM recipients should have Medicare Supplemental Insurance)  but the hospital cannot bill you or anyone for anything above the Medicare-approved $5,000.

So what are questions you might ask yourself in deciding between TM and MA? The first one is “am I sick or might I need medical care?”. The answer is YES. Even if you have “never been sick a day in your life” and your forebears all lived until 105, you might. If you are on Medicare you are old (or disabled). Even if you eat healthful food and take lots of natural supplements and run marathons or ride your bike 100 miles a week, things happen. You can be hit by a car (lots of cyclists and pedestrians are). Or be in a car wreck. Or have your first heart attack, or be diagnosed with cancer, or need surgery. This is WHY there is Medicare in the first place! Then think about whether you want the ability to choose where and from whom you get your care. Are the local doctors and hospitals in the network the ones you would prefer? Do you think you might ever want to go out of town for treatment at a place that has (or you think, or have been told, has) the best treatment for your disease? Do you travel a lot, or even more important, spend a significant period of the year at a second residence, outside the geographic area of the MA network?

How much risk do you want to take that an insurance company will deny diagnostic tests or treatment? How much time and energy do you want to spend fighting with them (especially when you are sick)? What if they continue to say no? Lawsuit? Is that how you wish to spend your time and money? And they could win (see: fine print). How much are the additional perks worth to you? Glasses? Gym memberships? Others? How do they weigh against the potential costs of treatment for major diseases? And what about mental or behavioral health coverage?

It is important to note that TM is far from perfect. As noted above, it only covers 80% of what it decides is the appropriate payment. Maybe not too bad for a $100 procedure (if you can find one), but can certainly be a problem if it is a $5,000 or $50,000 or $100,000 bill. So you probably will need that Medicare Supplement policy. Plus it doesn’t cover glasses, or hearing aids, or nursing homes, or much mental health (or gym memberships). And there may be some other things that you want that it doesn’t cover. But it does cover you anywhere and with almost any provider.

MA plans often cover some of the things that TM doesn’t, and can include no co-pays. Indeed, the reason they offer things like gym memberships is that they want HEALTHY seniors, for whom they get paid by the government and for whom they don’t have to lay out a lot of money (which insurance companies call the medical loss ratio). In fact, when you do get really sick and need a lot of surgery or cancer drugs they may urge you to consider going back to TM, as you have become a “cost center” instead of a “profit center”.

Traditional Medicare should be improved. It should cover 100%, not 80%, of hospital costs. It should cover all healthcare needs, including vision, hearing, dental, mental health. It should cost you nothing additional out of pocket. The reason this is unlikely to happen, however, is that would make it clearly more attractive than MA, and insurance companies would make less money.

In any case, you can think about what the risks and benefits of an MA plan vs TM are for you as you make your decision.


anharris said...

Next year, I will pay about $1400 a year for lowest Blue Cross medex rung...any doc, no specialist co-pays, no referral requirements. Given my care history and expectations for next year, I'll likely break even re co-pays and feel secure about which docs I can see here in Boston, the medical mecca...or anywhere in the US. $8 for drug plan, no co-pays for tier 1.

Unknown said...

Excellent summary. Why don't you submit as an editorial?

Carol A. Fritz said...

Sadly, I was forced to get a Medicare Advantage plan as I'd failed to sign up timely for Part F (now Part G). Bollixed that being medicated for nearly forty years for mental illness with no hospitalizations disqualified me from coverage. I tried many insurance companies. Can't risk that 20% payment on a massive hospital bill.

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