In my post DTC Advertising on TV illustrates the corruption and inequity of the US medical care system (March 6, 2021) I talked a little about advertisements for Medicare Advantage (MA), an alternative to traditional Medicare (TM, not ™) that involves an insurance company taking over your Medicare and you maybe paying additional money to, essentially, be enrolled in their HMO or PPO, with its concomitant advantages and disadvantages to you personally. Advantages include a variety of additional services that are not currently included in TM (they should be, but this is a different issue), such as vision care (or at least glasses), hearing aids, and sometimes dental care. This can save you money. The disadvantages are, essentially, the same as those for any HMO or PPO – a limited “network” of physicians and hospitals (and big charges for which you are liable if you go out of network) and, related to that, a limited geographic area in which your network applies. This is not generally a big issue for the occasional traveler (emergencies are usually covered) but can be a big problem for those who split their time between two or more areas. Plus, it doesn’t protect you from “surprise medical bills”, as they are called in Congress (which discusses them but has yet to enact anything to protect you from them). These occur when, while both your doctor and hospital are “in network”, someone else -- the ambulance company, some doctors caring for you (say, the group that staffs the Emergency Department, or the surgeon assisting your surgeon) are not. They can – and do – then send you big bills. This should be a caution.
Why I am bringing this up again now is that the pace and frequency of solicitations for people to abandon TM and enroll in MA have greatly accelerated because we have entered the “open enrollment” period, when people with Medicare can change their insurer or plan type, and the MA plans, mostly owned by insurance companies, really want you*. This is why in addition to adding more former NFL quarterbacks to their ads (Joe Theismann, who is only my age, joins the 78-year-old Joe Namath), you have (if you are of Medicare age) been getting dozens of information packets in your mail for the plans available in your area – almost all of which pick names and design their envelopes and otherwise do their best to make it look as if they are official and from Medicare (I was going to share the link to one with a name that prominently features “Medicare”, but I figured why advertise them?) They’re not. And they’re being successful. As documented by the Kaiser Family Foundation, MA plans had an 8% increase from 2018 to 2019 and a 15% increase from 2019 to 2020. Advertising really pays off! And, boy, does it pay! Thanks to your generosity (well, Congress’ generosity, on your behalf, or at least using your money) MA plans (and, by the way, “Medicare Advantage” is the official term specified in the legislation, in case you had any doubts about the influence of insurance companies over Congress) get paid a lot more than the government pays on your behalf to TM. For starters, their administrative overhead – comparable to that of most private insurers – is about 13.2%. Is that a lot? Well, the overhead for TM is about 1.8%! Some sources have cited the overhead for “Medicare” as about 3% -- still a lot better – but that is because it is combining the two. And, of course, as MA increases as a share of Medicare that figure will continue to rise.
MEDPAC, the Medicare Payment Advisory Commission, an independent agency created by the federal government to monitor and recommend on issues related to Medicare, notes that MA plans receive more money from Medicare but spend less on providing patient care to their members, costing Medicare an additional $8B. So it is definitely worth pursuing your business! Unless, of course, and this was the reason for the asterisk (*) above following really want you, you are sick. Then you would cost them money, and they would rather that you switch to regular TM. Which would be better for you, of course, but it would have been better for you to have never been in MA. This is a core part of their business strategy: attracting healthy seniors who will not cost them much money with the lure of cheap glasses and hearing aids and such (“cherry picking”) and then getting rid of those beneficiaries who really get sick and would cost them a lot of money (“lemon dropping”). All this is an effort to improve their “Medical Loss Ratio”, which is to say decrease the % of the money that they collect which they have to spend on actually taking care of you. If it sounds weird or offensive (and it is both) that their spending money on what they are supposed to be in the business of doing is called “loss”, it is a term that comes from the overall insurance industry. The % of homeowner’s premiums that have to be paid out to clients because their homes burn down, or auto insurance premiums that have to be paid if you are in a car wreck, is called the loss ratio. Of course, you don’t expect (and certainly don’t hope) to be in a car wreck or have your house burn down, but you do (or should) expect to receive medical care. Indeed, a more apt comparison to your house burning down might be made to “major medical” – coverage for costly hospitalizations – but in fact most people will need those if they live long enough. Much more about the cost of MA and the reasons for it can be found in the Health Affairs Blog posts of September 29 (Medicare Advantage, Direct Contracting, And The Medicare ‘Money Machine,’ Part 1: The Risk-Score Game), and 30 (Medicare Advantage, Direct Contracting, And The Medicare ‘Money Machine,’ Part 2: Building On The ACO Model) by Rick Gilfilan and former CMS administrator Donald Berwick. Another article on MA can be found in Consumer Reports.
Since not everyone who would be a good health risk is forgoing TM for MA, a new scam (excuse me, option!) has been developed by CMMI, the Centers for Medicare and Medicaid Innovation, a branch of CMS, the Center for Medicare and Medicaid Services, which has been granted authority to implement such changes as they (or the insurance company lobbyists) can come up with without needing further Congressional approval. This one is Direct Contracting Entities (DCEs). A company, particularly a health system or medical group, may send people a complicated letter telling them that (for their benefit!) the group has enrolled them in a DCE. The client has the choice to opt out, but this is disguised in complex legal language, and the benefits(!) are so strongly sold, that many people do not. Remember, this is not being sent to folks who are in MA, but those who have purposely and specifically chosen TM and NOT MA. Thus, they are not expecting that their providers will try to enroll them, backdoor, in a plan that, while it has benefits(!) – like those of MA – also lets insurance companies (wait, how di I get to an insurance company? I thought I was in TM!) collect a lot more money from CMS – like under MA! What a cool idea! If you resist MA because you are more concerned about your healthcare than insurance company profits, CMMI will find a way to allow you to help the insurance companies anyway! A lot more can be learned from a short (15 minute) youtube presentation by PNHP (Physician’s for a National Health Plan) member Ana Malinow.
Medicare, along with its parent, Social Security, is the most popular government program in the nation, and for good reason. It actually provides important benefits to the taxpaying American people. Instead of paying out lots of extra money to Wall St. and insurance companies, Congress should expand the benefits available under TM to include all necessary health care, including dental care, vision care, and hearing care. Instead of forbidding Medicare to negotiate drug prices with BigPharma and the Pharmacy Benefits Mangers (PBMs) that control access to drugs, Congress should ENCOURAGE and REQUIRE it. Finally, it should extend all these Medicare benefits to EVERYONE in the country, not just the elderly and disabled.
This would be what the American people need. But if you want to have this, you are going to need to shout it from the rooftops – and write letters to Congress -- to be heard over the sound of cash flowing from insurance companies into your Congresspeople’s pockets.
Then go to pnhp.org and sign the petition asking Sec. Becerra to close the DCE program!
