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Is a Medicare Advantage plan really an advantage at all?

Judy Garland • Mar 18, 2018 at 8:15 AM

As we approached the age for Medicare, I’m glad my husband and I were philosophically opposed to Advantage plans, offered as an alternative to traditional Medicare. At that point, many people fail to realize how important the choice can be, leaving them easy prey for the for-profit insurance sector. I believe that over time, for many of us, serious healthcare events show the “advantage” plans for what they can be: a serious mistake.

Wendell Potter, Kingsport’s renowned whistleblower on health insurers, when his mother was a nursing-home resident, was still what he calls Cigna’s vice president in charge of spin. She’d broken her hip and her doctor ordered assisted nursing care with physical therapy at the facility. After a few days she was told that if she stayed there she’d have to pay for the extra care herself. Why? Because a “utilization review nurse” from her MA plan, without ever seeing her, had decreed her care no longer “medically necessary” but “custodial” instead.

Wendell was able to move her into a well-regarded facility which would give her the skilled care but not if she remained in her “advantage” plan. They’d had enough of “managed care” tactics. His ability to navigate insurance bureaucracies enabled him to disenroll his mom from the MA plan immediately and enroll her in traditional Medicare. Also with a supplemental Medigap policy.

Our congressman, Phil Roe, advocates for the MAs by pointing to 37 percent of their beneficiaries whose annual income is $20,000 or less. Maybe that should concern him instead. Low-income people are attracted to the premiums which are lower at the beginning, though the lower premiums can be arbitrarily raised later on, along with unpredictable out-of-pocket costs. They can find themselves locked in a system that could bankrupt them. Two important things we’ve learned from decades with private insurers as gatekeepers for healthcare: they work constantly against the concept of shared risk by segmenting the market, and they will find ways to exact their profits one way or another. By now, the word “advantage” has come to be a warning flag for me.

In 1987, under Reagan, Congress created the Medicare Advantage program after for-profit insurers argued they could meet needs of seniors and the disabled so cost effectively they could still make a profit. By 1990, 44 percent had found they could not and dropped out. To lure them back, Congress started issuing them yearly bonuses in the form of generous overpayments.

In 2009, the Medicare Payment Advisory Commission advised Congress that those bonuses were costing Medicare (i.e. taxpayers) billions, $33 billion between 2004 and 2008. Companies received 14 percent more per beneficiary than it cost the government in traditional Medicare, even though health outcomes were no better. Overpayments also cause higher premiums for every Medicare beneficiary. The Affordable Care Act, under Obama, included a provision to phase out the overpayments. That particularly rankled Roe, who intends to reverse it, starving Medicare payments 18 months earlier than otherwise predicted. And for-profit insurers exploit Medicare and Medicaid for 40 percent of their profits. How else could United Healthcare’s CEO be among the highest paid?

“Advantage” plans can manage their risk with elderly enrollees. Each year, they do it by refiling changes with Medicare for the coming year, including copays, coinsurance, provider and pharmacy networks, premiums (typically increasing) and available drugs. This throws predictability out the window. There’s no guarantee your physician or other providers will remain in your network. You certainly can’t count on specialists you might need being in your network, leaving you with steep out-of-network costs.

A “utilization review nurse” could declare your prescription for skilled nursing care “not medically necessary“, but “custodial” without consulting you or your doctor. Increasingly, long-term-care facilities refuse to accept “advantage” plans, which can leave you in serious financial straits when you need expensive treatment. While there is a yearly out-of-pocket cap of up to $6,700, copays and coinsurance (non-existent in traditional Medicare) must be paid up-front, before treatment, often not feasible for low-income folks.

It’s no longer relatively easy to switch from managed plans to traditional Medicare and Medigap. You can only re-enroll during the fall Annual Election Period. A worse problem lies with the Medigap plans that cover what Medicare does not. In most states, if you’ve had an “advantage” plan more than a year, you probably can’t enroll in a Medigap plan, or it may require additional “underwriting” which assesses the company’s risk. Remember pre-Obamacare “pre-existing conditions”? How does Roe think low-income constituents fare without an expert like Wendell Potter in their corner? (If you think this is just liberal ranting, please refer to the conservative Forbes Finance Council for a short essay titled “The Hidden Costs in Medicare Advantage Plans,” 7/25/17.)

On March 2, a “Coalition for Medicare Choices” hosted a reception for local enrollees in “advantage” plans to meet Roe and thank him for supporting their program. (I wonder how many of Roe’s touted low-income beneficiaries were present, or invited?) Advantage plans may work for people with means to absorb unexpected costs, and who have good luck with their health. Their advocate, Congressman Roe, is like the fast-talking insurance salesmen, who also conceal the truth.

Judy Garland of Johnson City is a community health care activist.

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