Every year during Medicare’s open enrollment period, which is from October 15 to December 7 this year, millions of Medicare beneficiaries are bombarded by private insurance companies looking for their business. The advertising makes it sound like these benevolent companies are looking to offer you a pot of gold for free. If it sounds too good to be true then it is too good to be true.
Here’s the story. In 1997 congress authorized the creation of Medicare C which has come to be known as Medicare Advantage. It was an effort by Republicans to privatize Medicare and make it less of a government-run program. It was also a gift for the private insurance industry which continues to haul in huge profits when people switch from traditional Medicare A to Medicare C.
Medicare A is free to most people. Medicare A covers in-hospital care, short-term nursing home care, hospice and home health care. Things get complicated because there are some costs not completely covered by Medicare A, especially things such as outpatient services and medications. If you consider that Medicare A covers about 20% of health care costs then you need a supplemental policy and that will cost you about $150-$200 a month depending on which policy you choose.
I often counsel people about insurance options. When it comes to Medicare I run a spread sheet and lay out expenses. If you have traditional Medicare A and a Part B supplemental policy almost all of your medical expenses, except for medications, will be covered after paying for Part B premiums and Part B deductibles. The numbers vary but you will be 100% covered for a cost of between $3500-4000 a year. If you also have Vermont Medicaid those numbers could be close to zero.
Medicare A has no network restrictions and you can see any doctor anywhere in the U.S. who accepts Medicare payment. Almost all do. If you live in Vermont and you get sick in California you will be able to get the care you need without having to worry about coverage.
Medicare C is different. It exists within networks and a variety of similar configurations. A Medicare C beneficiary does not have the portability of traditional Medicare A. The Advantage plans will tell you that you can easily get care out of the network but you have to make appeals to the private insurance company and we all know how easy it is to deal with insurance company bureaucracy.
Once you are in an Advantage network there are a host of co-pays and deductibles that usually apply but may not be easily understood when signing on to the plan. After all, Medicare Advantage is really a form of managed care and that means money is being managed to maximize profits while minimizing affordable care options.
There will be a continued advertising blitz until December 7 because insurance companies will benefit if more people are lured in by the promise of added benefits at no cost.
We are all paying to support all the people who switch to Medicare Advantage even if we do not benefit directly. Enrollment figures vary but about 25-30% of Medicare beneficiaries enroll in Medicare Advantage. Some switch back to traditional Medicare A after they have had experiences using their insurance as an Advantage member.
According to National Public Radio the integrity of some Advantage insurers has also been questioned. “Health insurers that treat millions of seniors have overcharged Medicare by nearly $30 billion over the past three years alone, but federal officials say they are moving ahead with long-delayed plans to recoup at least part of the money. Officials have known for years that some Medicare Advantage plans overbill the government by exaggerating how sick their patients are or by charging Medicare for treating serious medical conditions they cannot prove their patients have.”
The Center for Medicare and Medicaid Services estimates that the Medicare Advantage insurers will be overpaid by $200 billion over the next decade.
When I counsel people about options I tell them that Medicare Advantage is a good cost-saving plan if you do not expect to get sick or don’t need to use your insurance. If you are 65 years old or more is it really worth the risk?