Medicare Advantage Plans…advantage to whom?


One of the ways Congress hopes to help pay for health care “reform” is to cut payments to Medicare Advantage Plans.  These are the plans that are in lieu of regular Medicare and range from pure HMOs to traditional coverage.  The government started out paying such plans (when they were largely HMOs) 95% of the cost of regular Medicare on the theory they could deliver more efficient care and the insurer could still make money.  Now these plans receive up to 14% more than regular Medicare (whose fault is that?).  No doubt members of Congress will find ways to blame the insurance companies offering such programs. As is typical for something run by the government the program is out of control. 

But wait, the Center for American Progress beat Congress to the punch, they have the problem figured out.  Here is what they say on their website:

  • Insurance company profiteering in the Medicare Advantage program raises premiums for a couple in traditional Medicare by up to $90 per year.

Insurance company profiteering, you gotta love it.

A well-coordinated and managed HMO should be able to deliver more for less.  There are two advantages to that.  First, taxpayers save money on the cost and second beneficiaries have lower out of pocket costs.  Even if the cost to the government is equal to the traditional Medicare program, there is value in shifting the risk and lowering the out of pocket costs for seniors.  Congress was not content to stop with HMOs.

In 1997, the Balanced Budget Act introduced Medicare Part C.  It started with HMOs, later PPOs were made available and finally fee for service was added.  Do you see a pattern here, less and less control over the provision of health care and higher and higher costs?  At the same time and most recently the government raised the subsidy to insurers providing these plans to make them more affordable (oh, how I love that word) and sometimes free to Medicare eligible Americans. And the point of that strategy is what? Could it be to keep seniors happy? 

Obviously (or maybe not), these programs are part of Medicare with the hope of saving money for somebody and expanding the choice for seniors.  So what happened?  

If it wasn’t cost efficient to offer these plans, why was Part C expanded?  Who found logic is paying more for Part C plans than for traditional Medicare? What bureaucrat made these decisions?  What Congress allowed it to get to this point?  Who was influenced by the AARP, the AMA or insurance lobbyists?   Don’t worry I consider these questions all rhetorical. 

Now we have the revelation that these options need to be taken down a peg ot two.  That will simply mean that the premium cost to the participants will go up and or their benefits will go down resulting in higher out of pocket costs.  In addition, it means that many of these people will return to traditional Medicare with their likely high costs. 

I scanned the available plans in my area and found many (without Rx coverage and an HMO) had no premium and potential out of pocket costs of between $2600 and $2900 per year.  The beneficiary does not pay the Medicare premium and does not need Medigap coverage.   Plans with prescription coverage included ranged in the area of $25 to $35 in monthly premium.  For more traditional plans with no network restrictions, the premium was as high as $193 and $5000 out of pocket costs.   

Medicare Part C is not “affordable” to the Federal government, the same government who got into the mess in the first place with ill-conceived options further screwed up by successive administrations and Congresses with their own goals (and lobbyists).  Therefore, to pay for expanded and subsidized health coverage for some Americans other Americans will receive less and pay more for it.  One has to wonder how this type of management of health care benefits will bode for a public option.  Of course for some us, there is no wondering at all.

 A brief history of Medicare Advanatage Plans 

Here is how Medicare explains the option (sounds like a pretty good deal doesn’t it?): 

Medicare Advantage Plans are health plan options that are approved by Medicare but run by private companies. They are part of the Medicare Program, and sometimes called “Part C.” When you join a Medicare Advantage Plan, you are still in Medicare. With Medicare Advantage Plans:

    Some of the plans require referrals to see specialists.

    In many cases, the premiums or the costs of services (co-pays and deductibles ) can be lower than they are in Original Medicare or Original Medicare with a Medigap policy. Medicare Health Plans charge different premiums and have different costs of services, so it is important to check with the plan before you join.

    The plans provide all of your Part A (hospital) and Part B (medical) coverage and must cover medically-necessary services.

    They often have networks, which means you may have to see doctors who belong to the plan or go to certain hospitals to get covered services.

    They generally offer extra benefits, and many include prescription drug coverage.

    In many cases, your costs for prescription drug coverage can be lower than in the stand-alone Medicare Prescription Drug Plans.

    Some of the plans coordinate your care, using networks and referrals, more than others. This can help manage your overall care and can also result in savings to you.

    You don’t need to buy a Medigap policy.


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