Happy Hannukah 2008
You Want a White Christmas? I’ll Give You a White Christmas

Medicare Advantage Plans

[EDITORIAL NOTE: Pulitzer Prize-winning journalist Saul Friedman writes the bi-monthly Reflections column for Time Goes By in which he comments on news, politics and social issues from his perspective as one of the younger members of the greatest generation. He also publishes a weekly column, Gray Matters, on aging for Newsday.

Category_bug_reflections I don’t wish to alarm you. But did you know that many of people on Medicare - more that 8.6 million of you - are inadvertently helping to kill Medicare? I don’t blame you for not realizing this. I didn’t really recognize the threat early on. But it’s worth remembering.

In 1995, after the right-wing cabal led by new House Speaker Newt Gingrich took over the Congress with its “Contract for America,” I attended a press breakfast with Gingrich’s lieutenant, Richard Armey, of Texas. And during the discussion, Armey told us that among other goals, the new Republican majority intended to “wean our old people away from Medicare.” I did not know exactly what he meant.

Nor did I understand immediately what Gingrich meant when he predicted at a meeting of health insurance executives that the Health Care Financing Administration, which ran Medicare, would “wither on the vine.” What he really meant was that Medicare as we know it would disappear. And now we know how they came close to accomplishing that.

The first step: Over objections from the Clinton administration and by threatening drastic cuts, Republicans and the insurance industry introduced private health care into Medicare and they called it Medicare HMOs.

It didn’t work as well as Republicans had thought. When too many elder got sick, as happens with people of a certain age, and the risk pool dried up, the HMO model didn’t and couldn’t save as much money as expected and still leave room for profits. So the insurers pulled out.

But some damage had been done. Beneficiaries had been drawn in to the convenience and extras offered by the insurers, who tried again with the same game under a different name: Medicare-Plus Choice. And the Medicare Agency had a new name, The Centers for Medicare and Medicaid Services, which was devoted not to Medicare, but to its privatization.

That came under George W., who had called Medicare a “dinosaur.” And what we got in 2003 was the Medicare Modernization Act (Tip: anytime a program is “modernized” or “reformed” to give you “choices,” watch out).

The MMA, which literally was passed under cover of darkness with the critical help of AARP, gave us the well-known and widely hated privatized Part D drug “benefit,” which depends on private insurers and the drug manufacturers and is outside traditional Medicare. It’s as if Republicans took seriously that canard, “I don’t want the government in my Medicare” for Medicare was given almost no role and, as you know, cannot even bargain for lower drug prices.

But even more insidious than Part D, with its infamous doughnut hole, is the fine print in the MMA. Did you know, for example, about the 45 percent trigger, which prohibits Medicare costs from exceeding 45 percent of general revenues? That’s meant to permanently stunt Medicare’s growth. Worse than that, the MMA introduced means testing for the first time, hitting more affluent beneficiaries with higher Part B premiums, which was designed to drive them away from Medicare.

But worse still, Medicare HMOs, Medicare Plus Choice was given new life in Medicare Advantage, and this time the Republicans sought to guarantee the insurers profits by giving them subsidies which will amount to more than $15 billion a year over the next decade, which has helped lure 20 percent of the 43 million Medicare beneficiaries away from traditional Medicare.

I know, buying a Medicare Advantage policy is more convenient and may seem cheaper than signing up for a separate Part D plan plus a Medigap policy to supplement traditional Medicare. But every recent independent study suggests Medicare Advantage is not a great bargain, after you count premiums, co-payments for every doctor or lab you visit and for the drugs you take - and the doughnut hole.

According to the Center for Economic and Policy Research, even with the benefits, out of pocket spending for people with Medicare Advantage plans continue to climb, along with drug prices and premiums.

But more important for the future of Medicare, according to the Commonwealth Fund, the government is spending for each Medicare Advantage enrollee nearly $1,000 or 12.4 percent more than it spends on traditional Medicare, or a total of $8.5 billion in extra payments.

But that extra money doesn’t necessarily buy you the same health security as straight Medicare. For not only does your Medicare Advantage provider require you to use doctors and hospitals in their networks, there is also no guarantee that the company will see you through an illness like cancer, failing kidneys or heart bypass surgery.

I’ve heard from too many patients and doctors who must fight for coverage they thought they had. Indeed, I know of major hospitals that won’t accept Medicare Advantage. To top off the tales of Medicare Advantage, Rep. Pete Stark, a California Democrat, released a Government Accountability study earlier this month that reported the Medicare Advantage plans, which did $91 billion in business this year, earned $1.3 billion more in profits than they expected in 2006. That’s money out of Medicare’s pocket.

I apologize for such a long story, but it’s necessary that you know that the new Congress and president hope to continue and go further with last year’s effort to roll back some of the more damaging provisions of the 2003 law. Democrats were able to reduce the subsidy payment to Medicare Advantage providers. The Medicare Rights Center asked the Congress to eliminate the extra payments to the Medicare Advantage plans. And the newly formed Alliance to Restore Medicare, which I’ve mention in another post, also wants to take Part D away from private insurers and place it under Medicare, end the means testing which penalizes higher income beneficiaries and repeal the 45 percent trigger.

Most seniors organizations have sent their wish lists to the office of president-elect and his health care appointees. But so far the largest organization, AARP, has not been heard from and a spokesman referred me to its well-advertised Divided We Fail campaign. Characteristically, it takes no specific position, which leaves it free, as in 2003, to compromise Medicare.

[At The Elder Storytelling Place today, a Christmas poem from Ellen Younkins titled Santa Baby.]


Perhaps AARP declines to comment since they have a vested interest in providing advantage plans to those who have Medicare.

In other news.....the donut hole is killing us!

Wow! Wonderful research, Ronni. I thought I knew all of the reasons to switch to a single payer system but you have provided more ammunition.

I am afraid that Obama's reform won't even touch this fiasco.

Saul, on the surface, I agree with you. But I know, from personal experience (caveat I work in health division of a national retirement community) that if you could remove the federal bureaucracy, the traditional HMO mentality, and produced a health plan that actually focused on human beings that happened to over 65, you could actually reduce costs to the individual and to Medicare.

Sorry to go on and on, this is not an advertisement; it is written with a passionate belief that a small group of people can make a difference and that difference has been ignored by the political administration on what can be done, effectively to help a population that has worked to achieve a level of health care that is earned, not to mention deserved.

Our little plan serves only 20,000 residents. It is only internal and is based on our patient centered medical home model. We have actually reduced the benefits costs to traditional Medicare by 3% while keeping premiums the same; reducing hospital stays by 50% over traditional Medicare; and paying for preventive measures to keep people healthy like we pay for use of the fitness center, we pay for dental exams, we pay for bone density scans for men and women. Too much to put here.

The truth is we need a MAJOR change in the Medicare Administration. Obama transition team has listed 3 people on the short list with a strong history and focus on prevention and removing politics from healthcare. I hope any one of them makes it and has the courage to get rid of dead weight within Medicare.

Whew, sorry, could not help myself!

I missed it if you mentioned the new Risk Adjustment Model (Hierarchical Condition Coding) in effect as of 2002.
The "health plans" don't have to settle for "only" 113% of the average Medicare expense for a local area per person anymore; Medicare assumes all of the risk traditionally associated with "insurance."

Now the "health plans" are heavily engaged in teaching providers to cross-reference to every condition a patient has ever had on their claims to maximize Medicare payments (to the health plan, not the provider). Sweet for the plans, Medicare retains all of the risk and the plans are no more than fiscal intermediaries living on the skim.

High cost of health care indeed.

In Oregon, if someone only has medicare, they find many doctors closed to them. They have to drive many miles to find one who will accept Medicare patients since Oregon has been penalized by how much Medicare will cover of the actual costs of the treatment-- not surprisingly, the doctors are refusing such patients. It has happened (so I have read) because the state has been efficient which led to lower percentage of paying. It is not a choice for everyone to drive to doctors that far away; so having a supplementary program is not about saving money because in my experience (I went onto it in October) none of it saves money. The premiums we pay, with a supplemental, which is with the same company that my husband had with his corporate retirement benefit, is about what we were paying before we went onto Medicare. For us, it's about having a doctor close enough and since any of them are 25 miles away, even that isn't close by most people's standards. Other than a mammogram, I haven't been in a doctor's office in well over a year and my prescription costs are way under what that premium is. Insurance for me is about something potentially going wrong (which it is bound to eventually) and having a doctor I can trust when that happens.

Before we began Medicare, I talked to a lot of those who had already gotten there for what they did. I think each family must do what is best for them; but if we all push for universal coverage, no more medicare, no more special federal or even state plans, no more insurance companies, this will be a moot argument. That won't be easy to accomplish. If there is any hope it will work, without bankrupting our country, it will have to be done. It also might mean seniors end up with less actual coverage and maybe paying more for it; but what is fair is what I would like to see. Having families where they can't take their children in for yearly physicals is not good either.

Obama has been committed to change. He appointed Tom Daschle not only to the cabinet but to head a task force. Daschle wrote a book about a single payer, universal system. The screams of rage over job losses and all the other complications will begin as soon as they move that direction; so all citizens who believe in it, as do I, should be sure their voices are also heard.

Right now, as it currently stands, it is not the fault of those elders who have the advantage. They are doing what is best for their families and to me that is our obligation. I understand that you would see it otherwise. It is bad that all cannot afford or be offered the option even to do likewise, but that is what changing the medical care system is all about. Universal coverage might end up meaning less coverage for some than they even have under Medicare. But it will be fair, and I am all for the change.

Very few doctors take Medicare here. Families with Medicare Advantaged elders have now discovered what a disaster it all is. It's all beyond me. I am hoping that once my husband retires, the VA will once more welcome me back with semi open arms.

As usual in discussions of Medicare, this article neglects the role of non-profit HMOs, as in the statement:
"the HMO model didn’t and couldn’t save as much money as expected and still leave room for profits. So the insurers pulled out." I am a member of a non-profit HMO Advantage plan which has none of the faults that the article complains about, in my experience. Sometimes it sounds like critics are saying that "some people have good, economical health care thanks to government support for their non-profit Medicare plan and we have to do something about that".

Our doctor,(an internist) will NOT take Medicare patients who have the Advantage plan. He also, about a year ago stopped taking any NEW Medicare patients. He is a fine young doctor and we are extremely satisfied with him and feel fortunate we found him before he and his practice had to adopt these measures.
We have the original Medicare plan plus the AARP United supplement plan. The Plan D (for disaster) eats us up every year in the donut hole. What a farce. Written just for the insurers and the drug companies.

1. Thank you Ronni for posting the Wisdom - U Tube...never saw it before and it is interesting
2. Love being on Medicare - Thank God for it - went broke paying for regular health insurance
3. Don't know the ins and outs - just doing what needs doing and fits our fixed income
4. Had BC Supplement for a year because my husband had hip replacement - that was great - but the premiums $165.00 a month was too much with all the other bills
5. It is really tough when you don't have MONEY....big time

Kaiser Northern California is the largest health organization in the country to my knowledge. It has more than 5,000 doctors and is opening new hospitals and expanding its area of coverage. For seniors, it offers its MA/HMO product, Senior Advantange.
In my county in Northern California it costs $74 per month. Yes, there are co-pays, but the policy includes Medicare Part A, B and D. MA is Part C. So, before one makes a simplistic argument that all MA/HMO models are bad and overpriced, I think one needs to look at Kaiser, Northern CA.
My understanding is that the U.S. government pays Kaiser about $1,100 per month for me under that policy. It is then up to Kaiser to pay for and deal with any ailments I come down with. I'm 65 and don't have much wrong with me. Kaiser makes money on me, for sure. But it is the 80-year-olds that cost the system money. The good news is that there are far less of them than 65-year-olds,and the the oldest of the Baby Boomers are 63 this year. So, the truth is that the MA system can work well as planned.
MA/HMOs differ in different parts of the country and under different companies. I look forward to having my wife who is not yet 65 having the right to join Medicare and Kaiser Senior Advantage soon, under Obama and improved health coverage.
We need to talk more to find the right alternatives for people, but I would NOT eliminate MA so fast. The pay-for-fee model under Mediare has obvious faults. The incentive is for doctors and hospitals to "work" the system for increased income. Neither system is probably perfect. It is the big picture that counts here.

If we allow the Republican supported Pharmaceutical and health insurance industry to destroy Medicare/caid we will have millions of elerly who will not be able to afford health insurance, medical treatment or their prescriptions. For six years I was paying $50 a month for supplemental health insurance. Now, thanks to Bush and his disastrous MMA seniors will have to pay $150-200 per month for supplemental insurance. For seniors dependent on Social Security and receiving anywhere from $800-1,000 per month, we will not be able to afford supplemental insurance. As for myself, I receive, $1100 per month, I pay $750 for rent, and that does not leave much for food and my meds. The Republican plan is to destroy Social Security and Medicare so they can continue to enrich the Pharma and insurance industry. And while they laugh all the way to their offshore banks, the elderly, seniors, and the disabled will suffer. The Pharma and insurance industry receive billions of dollars per year in subsidies, get rid of them and Medicare will no longer have any problems since those billions will go back to Traditional Medicare and not to enrich a bunch of greedy, irresponsible companies.

Just turned 65.

I'm struggling with Medicare Advantage because my chiropractor takes only Straight Medicare.

He feels I should go for a few months of treatment to restore my weak immune system.

Now I'm contemplating dropping Medicare Advantage but must investigate what the fallout might be.

I called my local community council and am waiting for a reply.

This quagmire is all new to me.

Basically, as an Orthodox Jew, I believe:
A. We don't own our bodies. The body is G-d's creation, on loan to us, and we and the doctor are obliged to provide for it the best we can. This is NOT a 'religious' point of view. This is reality-fact.

B. A society is judged on how it takes care of its elderly, young and frail.

Remember youngsters:
"The Elderly ARE YOUR FUTURE and You Can't Run Away from It."


Mr. Saul Friedman, very valuable web site.

For those of you that are concerned about your doctors refusing to accept Medicare Advantage plans, maybe you should think twice about who you should be pointing your fingers at. The doctor wants to maximize his income which is done by seeing younger patients who take less of his time and likely have higher paying private insurance. The greed occurs there. Medicare Advantage plans pay at a relatively lower rate because they are trying to contain costs and the new proposed plans would pay doctors even less (that is where the real money is at..not with the insurers). So, get ready for the provider shortages, long lines and poor care. It's the only possible outcome of nationalizing care. As far as insurers go, the profit margin on Advantage plans is not very large (Medicare likes to see roughly 5%) and nowhere near guaranteed...there is potential for huge losses. When you see large numbers that outrage you such as the 8.5 B listed in another posting, be sure to think about this on a percentage basis (relative to total healthcare spend)...i don't have numbers to quote (maybe someeone else does) but it's not that large.

Or another way you can look at this is to look at the PE ratios of companies like United who have a large stake in Advantage plans. Compare these ratios to other companies and to the market as a whole. IF this were such a huge cash-cow, they're stock prices would be astronomical and the ratios larger than average. They're not though because insurance companies aren't making the obscene profits that the partison politics implies.

But we can all hate and blame and play the game but just remember, when nationalized care fails, you were warned.

"Remember youngsters:
"The Elderly ARE YOUR FUTURE and You Can't Run Away from It."

Exactly - so get to the polls and don't let the Boomers leave you penniless and bankrupt else you will be retireing in the equivelant of a third world country.

Medicare advantage IS SOCIALISM for the Insurance companies. It is "guaranteed income" for them. then they can "cheat" on services like not sending a home nurse or failing to provide a covered service even if it is in their contract with Medicare. They cut little here and a little there and they enhance their bottom line and Seniors may or may not notice but try to fight them for needed care and they will try to crush you. Seniors may think that Medicare Advantage is the best thing since sliced bread, but when you find yourself with a catastrophic illness things can get ugly quickly. Lying in a hospital bed in a crisis is not the time to find out you selected the wrong insurance. I now have a Medicare supplement and have been better off. Found out much too late to help my poor husband. We need a plan for healthcare NOT more subsidies for Insurance companies

I have my father in a nursing home. He is on a Medicare Advantage plan. They are suggesting strongly that I drop the advantage plan and go back on Medicare. I am reluctant to do this. Wondering if he needs any other coverage. I know that we will have to enroll him in D. Is traditional Medicare enough when you are in longterm care.

I think Medicare is extremely important for older people who can not afford to pay their bills. Years ago when I first turned 65 I became very ill and my medical bills almost made me lose my home. I had to seek credit counseling from debtguru.com They saved my credit report and helped me lower all my medical costs.

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