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.

Incremental change will not cure our health care system

Earlier this year I discussed (The denominator matters: we only have a quality health care system if everyone can access it!, February 16, 2020) an article from the New York Times by Elisabeth Rosenthal, the editor of the Kaiser Health News and an emergency physician, called “Where the frauds are all legal.” One of those “frauds” I focused on was “surprise” medical bills. “Even though you went to a hospital that was in your insurance network and saw a surgeon who was in your network,” I wrote, “it turns out that the ER group or the anesthesiology group contracted by the hospital, or the assistant surgeon your surgeon picked, is not in network. Boom! $10,000, $100,000 bills! No one is “satisfied” by this.”

In fact, this is not entirely correct. Yes, your insurance company is not happy about this if they have to pay the bill. Yes, you, the patient, are certainly not happy about it if the insurance company doesn’t pay the bill, or only pays a part of it, and you are stuck with the rest. Very likely, the hospital itself doesn’t like this if they themselves are indeed in your network, because it makes them look bad, and they know that you, and your insurance company, are going to hold them in large part responsible. So who likes it? Well, as you might guess, those doctors who are getting the big payments. In fact, probably even if the hospital tried to hire its own, say, anesthesiologists or emergency physicians, they’d have a hard time paying as much as those independent groups do.

But the other stakeholders who are happy with this arrangement are the owners of these physician practices, who are not always the physicians themselves but increasingly private equity funds, which have been buying out physician groups for a few years (‘Specialty physician groups attracting private equity investment’, Modern Healthcare, August 31, 2019). Expanding upon a “research letter” published in JAMA, JM Zhu from the Leonard Davis Institute of Health Economics at the University of Pennsylvania writes:

Of approximately 18,000 group medical practices, we found 355 physician practice acquisitions across a number of specialties, most commonly anesthesiology (19.4%), multi-specialty (19.4%), emergency medicine (12.1%), family practice (11.1%), and dermatology (9.9%). From 2015 to 2016, there was also an increase in the number of acquired cardiology, ophthalmology, radiology, and obstetrics/gynecology practices. Acquired practices had an average of 16.3 physicians, 4 sites, and 6.2 physicians affiliated with each site. About 44% of acquired practices were in the South. (‘Private Equity Investment in Physician Practices’, February 18, 2020).

Of course, it doesn’t take great acumen to realize that the reason that private equity investors are attracted to buy these practices is exactly the opportunity to profit handsomely from this “loophole”, by what Rosenthal calls “legal fraud”.  In essentially all areas, the whole strategy of private equity funds is exactly this sort of “gaming the system”, finding the margin where the income far exceeds the cost because of some loophole in the law.

This demonstrates several flaws in our current healthcare “system”. The most obvious is the specific problem created by “surprise” bills, one that has been even recognized (although not addressed) by Congress. For example, HR 3502, “Protecting people from surprise medical bills”, introduced in this congress by Rep. Raul Ruiz (D-CA). It could pass the House, and if both the Senate and White House flip, it could even become law. Of course, it would have considerable opposition from the very equity firms that are making money from the current situation. This is the second flaw – legislation to regulate the system often fails because those who make big money from the very problems such regulation is intended to correct have – big money. They can give contributions to legislators.

Every inequity in health care, every exploitation of the system, results in (and usually from) someone making money, and those “someones” are very interested in preventing the issue from being corrected. This holds true, as I have previously discussed, for hospitals (“health systems”), long term care companies, pharmaceutical and device companies, and insurance companies, as well as equity-owned physician groups. Kansas Congressman and GOP Senate candidate Roger Marshall, according to a recent article in the Kansas City Star by Shorman and Lowry, pushed for aid to physician-owned hospitals (ones not yet bought up by for-profit equity companies) while his wife, as a partner in real estate ventures that owned the land that they were on, profited greatly! In this case it didn’t even require contributions to politicians; the politician was in it for himself.  You can be sure that if there is a buck to be made, someone will be making it. You can just be certain that it isn’t you, the patient, particularly if you are uninsured, poorly insured, or poor. Of course, if you are, you’ve probably figured out by now that the system overall is not designed for you!

The design of the capitalist US, particularly so in this age of corporate “gangster” capitalism is to make money for the wealthiest and everyone else be damned. The only question that might still be open to discussion is whether people’s health, and health care, should be subjected to the same rules of that system as consumer goods. After all, it is your health, your life! Your family’s health and life! The same could, and should, be said for other basic necessities such as food, shelter, and education, but health has special resonance such that every survey of the American people finds overwhelming support for the idea that everyone should be able to get adequate healthcare, and agreement that profiteers such as insurance companies and pharmaceutical companies are bad guys (there is less awareness of the role of hospital systems, still less of the private-equity-owned physician groups discussed here).

The third key aspect (I keep wanting to say “flaw” until I realize there are strong advocates for these policies) that this illustrates is the fatuousness of trying to solve the problems of our health care system and its exploitation by profiteers one issue at a time. Each scam that has been exposed and addressed by regulations or legislation (more rarely) has generated another; each loophole that is supposedly “closed” contains exceptions. The problem isn’t “bad apples” (although there are many), it is the whole system and the powerful forces that wish to continue it.

While Republicans policies are often targeted at eliminating any regulation, and indeed encouraging overt corruption and exploitation, “mainstream” Democratic policies are about putting in occasional patches, and then saying “there!” until another scam pops up. The Democratic Party, like the GOP, is beholden to rich donors, and a high percentage of theirs are financiers. Their mantra, clearly articulated by Joe Biden, is that we need to keep the private (read: profit-making) sector, and not change everything. Unfortunately, if the goal is actual to make the health system more equitable and increase the nation’s health, it cannot work.  It certainly cannot contain costs; the very profit that these companies make IS the cost!

The only solution is a comprehensive change to our entire health system, one that eliminates the incentive for profit-making altogether. This will work, is a good idea, and is what we should do, starting with Medicare for All.