Open Enrollment Season for Medicare and Medicare Advantage: What you should know

This is an unusually long post, but I decided it was better to have all the information in one post rather to divide it into two. Hopefully you can find the part/s you feel of use to you.

It is Medicare re-enrollment season again, so it seems to me to be a good time to review some of the key issues seniors should consider when deciding to sign up for the same, or a new plan. I have written about Medicare and Medicare Advantage a number of times (e.g., “Insurers in trouble for the wrong reason: Wall St. wants them to rip you off for even MORE!”, Aug 22, 2024; Medicare Advantage: OK, it's bad for the country, but what about for me?, Dec 6, 2022) and have been critical of Medicare Advantage (MA) plans, but I hope that this piece will be more informational. If you are Medicare eligible, You probably get a lot of “information” from both Medicare and MA plans at this time of year, the former providing nothing that could much help you decide (“it’s all good!”) and the latter not only assuring you that MA is the right thing, but that their MA plan is the best one for you. There are some things you should know, and consider, and I will provide some information and some opinions, trying to carefully label the opinions.

To begin with, it makes a difference if you are first starting on Medicare or are doing your annual re-enrollment (and perhaps changing plans). If you are starting, this is not necessarily the time of year when it happens; it happens whenever you turn 65. At that point, you are required to enroll in Medicare Part A, which is what covers inpatient hospitalization and is the only part paid for by the Medicare Trust Fund, funded by your Medicare deductions. If you are still working and are covered by an employer health plan, you do not need to enroll in Part B yet. Part B, which pays for doctor (and other clinician) fees and all outpatient care (including that rendered while you are actually in the hospital, even sleeping there for a night or two; this is a neat trick but not part of this discussion), is paid for by monthly payments by you, supplemented as necessary by general taxes. The “standard” monthly premium is now $174.70 (if your mean adjusted gross income, MAGI, as a couple is less than $206,000), but it can be decreased or eliminated for low-income people and is higher for high-income people thorough a formula called IRMAA (Income-related monthly adjustment amount). More of this financial information is here, from Medicare, and here from a private counselor. The IRMAA is based on your last tax return, so if you retire in 2024, it will be based on your 2023 return. If you think that you will make a lot less in retirement than you did in the last year you worked, you can appeal this, providing evidence that your MAGI will be less than it was before retirement. Anyway, you must enroll in and pay for Part B once you are no longer covered by your employer’s plan, and if you don’t you are subject to significant penalties.

There are two other letters, Part C and Part D. Part C is Medicare Advantage, about which more in a moment. Part D is the Medicare Drug Plan, passed under the GW Bush administration. It requires Medicare recipients to have such a plan, all of which are sold by private insurance companies, mostly the same ones that sell insurance to pre-Medicare people and also sell Medicare Advantage plans. It is good for them (opinion) as everyone is required to pay them a premium, and they work hard to pay out as little as possible, as do all insurance plans. (See my blog post Medicare Part D: Learn from my mistakes, Dec 13, 2022). I’ll just say now it can be confusing; you may want the plan with the lowest premiums, especially if you are not on drugs that require a high co-pay, but that is sometimes hard to figure out. You gotta do it, though.

Which brings us to the choice between Traditional Medicare (TM), a government funded system available to all eligible people (over 65 and some others with disabilities), and Medicare Advantage, which is not Medicare (despite the name) but a group of private insurance products paid for with Medicare dollars. In general, these are very similar to HMO or PPO plans for pre-Medicare customers. Both have advantages (no pun intended, by me, although the renaming of the program by Congress from Medicare+Choice is apparently an intentional effort to promote it), and disadvantages. A recent Associated Press article (‘Medicare Advantage shopping season arrives with a dose of confusion and some political implications’ Sept 28, 2024) notes that MA benefits are becoming less and choice of plans fewer.

The advantages (OK, I’ll call them plusses) of MA plans include one premium, often completely covered by Medicare dollars with little or no out-of-pocket cost to the recipient, that includes coverage for Part A, Part B, and Part D. It also may include coverage for other things not covered by TM, including glasses, hearing aids, and gym memberships. It may or may not include mental health coverage, and if it does the character and quality of that coverage varies. It rarely if ever includes long-term care. While many of these extra benefits are kind of loss-leaders that cost the insurers little, the big plusses of MA are not needing to pay a Part B or Part D premium in addition, or to buy a Medicare Supplement (no letter code here*) to cover the costs incurred and not paid by TM to its recipients. The big cost for folks with TM is that it only pays 80% of approved charges for hospitalization, so if you have a hospitalization for something that Medicare decides it can be charged $1000 for (this is not what the hospital charges, which can and usually is several times more, but they have to take the Medicare-approved amount), it only pays $800 and you have to pay the $200. Or $2000 if the approved charge is $10,000. Or whatever. It can be and often is a lot, which is why people on TM should buy a Supplement plan that will cover the difference. But cost them more.

So, so far this looks like a win for MA plans over TM: one premium, no Part B or Part D premiums, no need for a Supplement plan to cover the 20%, and some extra perks. This is why they are often well-received by the folks who enroll in them, and what is pitched in their mailings and TV ads. There are, however, some potential (and frequent) minuses to MA plans, which may want to make you consider TM, plus a Supplement.

The key issue is that MA is a private insurance plan, not Medicare, and this can and does result in some limitations as well as some more surprising payment issues, like denial of payment. As I mentioned above, MA programs are like HMO and PPO plans, and this means a limited network of providers (hospital and doctors), usually in your geographic area. Unlike TM, which pays claims from providers on a per-episode basis at the rate set by Medicare, MA plans get your money up front and pays providers based on deals they have negotiated, which is why you are restricted in the places that you can get care (they ones they have the best deals with). This is important, and so it is critical for you to be sure that the places and people from which you get care are “in-network” for them. If you have a second home or travel a lot or spend time with family outside your home region, you want to be sure that you can get non-emergency care there, since MA plans are usually geographic. In addition, you might consider providers you think you might want to get care in the future if something bad happens. For example, many top hospitals that people seek out across the country if they have cancer or another dangerous condition, such as Mayo Clinic, MD Anderson, and Sloan-Kettering, do not accept any MA plans, but do accept TM.

The thing is that these may not seem as important to you if you are 65 and relatively healthy and free glasses and hearing aids and gym memberships are nice, but they increasingly become issues as you age. Older people have more diseases than younger (even younger seniors) and use more care. Consider what your future might hold. If right now you just have a few aches and pains, and take a couple of medications that control some conditions, if you live you will get older and as you get older these are likely to get worse. Sometimes people in MA plans that are actually covering their expensive care can find the insurers urging them to switch to TM, since while those companies are happy to accept your premiums (or those Medicare pays on your behalf, which is, BTW, more than they allocate for TM patients) they are less enthusiastic about paying out large amounts, especially when it can go on and on.

The other big minus that comes from MA plans being private insurance is that they can, and often do, deny coverage for things your doctor has ordered. They can do that. If a procedure or treatment is Medicare-approved, TM simply pays it (although, in hospitalization, only 80%). MA plans, however, like other private insurance plans, can deny coverage for a variety of reasons. With some, denial is almost routine for anything expensive. You can appeal it, but most people don’t. And they can deny it again. And most people won’t keep appealing it. Relatively recent legislation requires MA to pay for any Medicare-approved treatment, but that doesn’t mean that they always do; they can deny on technicalities and even if they must pay fines, it is often considered “a cost of doing business” that is less than actually paying for your care.

So maybe get an MA plan when you are younger and healthier and then switch to TM when you need more care? In addition to this being exactly what the MA plans want – to cover healthy seniors and divest of them when they become expensive to care for, the other big issue is eligibility for and cost of Medicare Supplement (Medigap) plans. Under the law, if you take TM when you first start receiving Medicare, all those offering Supplement plans must offer them to you at “community rates”, that is, not adjusted for your individual health status. But if you sign up for an MA plan, and then a year or ten or 15 down the road decide you want to switch to TM for some reason (maybe you are unhappy with the providers available to you, and want to go to an institution that doesn’t accept MA, or are frustrated with the denials you receive for care that you and your physician think you need), you can at this re-enrollment period. But the “community rating” charge for Supplement plans no longer is required; those companies offering them (often the same ones offering MA) can do underwriting. This means that they can assess your current health status and risks and adjust their premiums upward based on it, or deny you coverage altogether. Since you are often making this change when you are older, sicker, and have greater risk, you may not be able to get, or afford, a Supplement. This is a serious consideration, both when you first get Medicare and in the early years of re-enrollment before you become very sick. And, if you live long enough, you probably will. So seriously think about the decision, including both current and potential future benefits and risk of harm.

Of course, and here is my big opinion, the whole idea of taking something that is GOOD, Medicare, which covers all aged Americans, and turning it over to the private sector to operate as a business where they get paid in advance and try to pay out as little as possible, is BAD. What we need is improved and expanded Medicare for All. Expanded means everyone in our country, not just seniors, are in the same plan; everyone from birth on has Medicare and we do not have a hodgepodge of different programs covering our population. All in it together. Improved means getting rid of all the negatives of the current TM program: paying for 100%, not 80% of approved charges, covering all necessary health issues including dental care, mental health care, and long-term care as well as glasses and hearing aids.

Wouldn’t this cost more? Well, cost whom? The outlay for actual health care for all those expanded and improved services would certainly be more, but the outlay for “health care” which includes profit for insurers, providers, and drug companies would be, for the government and for you out of pocket (unless you are extremely wealthy and can afford it) less. Think about that. Should money you pay, in taxes and out-of-pocket, for health care be used for providing health care to you and your fellow Americans, or should a major portion of it be used to generate huge profits for companies and pay their executives multi-million-dollar salaries?

Think about it.

*Another confusing thing. While Medicare Supplements (MediGap) plans are not as a group assigned a “Part” letter by Medicare, the various plans do have 10 different letter designations, A-D, F, G, K-N (no E, H-J). This is actually good and one of the very few rational and helpful things in US health insurance, as ALL plans of one letter have to offer exactly the same benefits; a K or an N plan from any insurer has to have the same benefits as from any other, so you can just choose the company by cost to you and service. Unfortunately, they do not get better or worse, or more or less comprehensive, as they progress through the alphabet; you have to read what each one covers. That would be asking too much!

 

Why are we paying wealthy corporations billions to limit our healthcare?

In an excellent “Guest Essay” in the New York Times (July 18, 2023) Linan Eirav and Amy Finkelstein ask a very important question: ‘We’re Already Paying for Universal Health Care. Why Don’t We Have It?’ It is a question that many people, including me, have asked many times over many years. This article answers several important concerns. One, as indicated in the title, is that the economic argument against it (“It will cost too much”) is nonsense, as we (the US) already pays more from public funds (per capita and overall) than other countries that have universal healthcare coverage. This has been documented for decades by authors such as Woolhandler and Himmelstein; when we consider Medicare, Medicaid, government employees and retirees at all levels, military retirees and families, and (least obvious) the lost revenue from the taxes not paid on employee health insurance contributions by employers (when it would be if it were salary) it is not only more than other countries pay for covering everyone, it is more than half US health expenditures.

The authors emphasize that while the emphasis is often on those Americans who are uninsured (and despite decreases as a result of the ACA, it is still far too many), there is also great suffering and uncertainty among those who have health insurance. This is because 1) their health insurance may be of poor quality, not covering all their health needs, and subject to the whims of insurance company denials, and 2) because there is uncertainty about whether they will continue to have it. The former is a real concern:

Many insured people still face the risk of enormous medical bills for their “covered” care. A team of researchers estimated that as of mid-2020, collections agencies held $140 billion in unpaid medical bills, reflecting care delivered before the Covid-19 pandemic. To put that number in perspective, that’s more than the amount held by collection agencies for all other consumer debt from nonmedical sources combined.

And the latter, losing health insurance, can be because temporary government programs end or because employer coverage (and amount of employee contribution) changes. Or because the requirements for qualifying for many programs can leave people out because they didn’t know they were eligible, because they weren’t aware of or able to fill out the paperwork, or for many other reasons. The most simple, profound, and perhaps important paragraph in the article is:

The risk of losing coverage is an inevitable consequence of a lack of universal coverage. Whenever there are varied pathways to eligibility, there will be many people who fail to find their path.

This is incredibly important. The risk of losing coverage is an inevitable consequence of a lack of universal coverage.  The cobbling together of different mechanisms for covering different groups of people (employer based insurance, various government funded insurance, self-pay, etc.) intrinsically leaves the opportunity for people to lose their insurance coverage. Only one solution prevents this, one so subtle and elusive that every other wealthy – and most middle income – country in the world has done it: cover everyone. Period. No qualification, no sign-up, no criteria, and preferably in one program. Just cover everybody. You are American, you are alive, you are covered.

That would take care of who is covered – everyone – but in itself is insufficient, as the coverage must be good coverage. It must pay for all needed healthcare and none that is unneeded. Thus, if we were to accomplish this by passing Medicare for ALL, that Medicare program would need to pay 100% (not 80%) of what is covered and cover all health needs include mental health, eyeglasses, hearing aids, and long-term care, without payments from users at the time of service. Unlike Eirav and Finkelstein, I do not think that the best answer is to provide basic coverage to everyone and allow wealthier people (or their employers) to purchase “upgrades”  as if it were an airline. Indeed, the best way to ensure that poor, uneducated, or unempowered people get the coverage and care that they need is to require the wealthy, educated, privileged and empowered to be in the same program. They will make sure that it works for them, and that will mean it works for everyone. The “upgrades” (if you like that term) should only be to allow people to purchase things they’d like but are not medically needed (most commonly cited is purely cosmetic surgery).

The money is there. It is currently going into the pockets and profits of insurance companies and pharmaceutical manufacturers (see, for example, How a Drug Maker Profited by Slow-Walking a Promising H.I.V. Therapy in the Jul 22, 2023 NY Times). Their greed is without limits. As I have discussed (Why do drugs cost so much? And what can we do about it?, Apr 18, 2023) Medicare is the only drug purchaser in the US with sufficient clout to negotiate down drug prices (other than the VA and TriCare, which already do). In response, the administration has carried through with its promise to the American people to let it do so, originally forbidden by the pharma-supported legislation creating the Medicare drug program, “Part D” (Fantastic (& fantastical) hospital charges: The industry + insurers + Pharma making money hand over fist!, Mar 26, 2023). This is  incredibly popular among Americans of all political persuasions, but not, of course, among the drug companies, who the NY Times reports are going all out to keep us paying the highest drug prices in the world (Drugmakers Are ‘Throwing the Kitchen Sink’ to Halt Medicare Price Negotiations, NY Times, Jul 23, 2023).

The money is also there and being pocketed by the owners of hospitals, health systems and practice groups, whether for-profit (often owned by private equity) or ostensibly non-profit but making and socking away money hand over fist. It is outrageous, but these companies are able to limit people’s access to healthcare and provide administrative or paperwork obstacles that discourage access, as shockingly demonstrated in another recent article by Chavi Karkowsky, (NY Times July 20, 2023), The Overlooked Reason Our Health Care System Crushes Patients. In discussing how her patient almost died because of the bureaucracy, Karkowsky says

This is the story of our medical system — quick, massive, powerful, able to assemble a team in under an hour and willing to spend thousands of dollars when a patient is sick.

This is also the story of a medical system that didn’t think my patient was worth a $12 medication to prevent any of this from happening.

This patient’s story is a result of the space between the care that providers want to give and the care that the patient actually receives. That space is full of barriers — tasks, paperwork, bureaucracy. Each is a point where someone can say no.

Why should we want to say no? In a rational system, everyone would be eligible and get the same benefit. No obstacles are necessary. Then the money we already spend would not only get us better healthcare, it would leave enough left over to begin to ensure that people have sufficient housing, food, and education.

All that would suffer would be the already bloated wealth of billionaires and huge corporations. And that should have zero weight.