When you want to know if the US government, or the political party in charge, is pulling a fast one on the public, look at the name they give a new program or law. The USA PATRIOT Act is a classic example. An acronym for Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism, that law, passed with no hearings in November 2001 was actually a huge wishlist of a decade’s worth of repressive and invasive assaults on the Bill of Rights pulled off Congressional shelves and rushed through for President GW Bush’s signature using the 9-11 attacks as justification.
When it comes to assaults on Medicare, the same thing happens. Medicare Advantage, originally called Medicare Choice, introduced in 1997 during the Clinton administration, got its even slipperier monicker in 2003. It deserved neither as it doesn’t improve choice nor is it an advantage. Presented to Medicare enrollees as a better option than the government’s traditional Medicare Parts A and B and D, it reduces the choice of doctor and can leave patients without any protection from huge health costs or any ability to buy supplemental insurance. Even if these patients could afford to buy an index policy insurance or health insurance, the system might be too confusing to process.
Since the traditional government Medicare program is accepted as payment in full by all hospitals and by nearly all physicians, it is actually the ultimate “choice” program, while Medicare Advantage plans typically limit coverage to approved physicians and hospitals only, so the name “choice” was at best ironic. As for “advantage” that really applied really to the health insurance industry, not the Medicare enrollee.
Under Medicare Advantage, the Medicare recipient opts to buy a private (for-profit or not-for-profit) insurance package, sometimes for a little more money, and sometimes for no money beyond the amount already being paid to the government for Medicare Part B. That private plan will then cover the costs of hospital and out-patient care as well as drugs. But not for all the costs. Many plans exclude certain procedures and since virtually all MA plans are “managed care” insurance, subscribers need to get approved by a gatekeeper primary care physician who is in the plan’s network before they can go to a specialist. And even then, the specialist they go to, as well as the primary care gatekeeper physician, has to be someone who is in the plan that you have enrolled in. For many people who live in more rural or even in medically underserved urban areas even in the cities and suburbs, this can cause big problems. There may not even be a needed specialist, or the one or ones who are in the plan may be fully booked for months.
With traditional government Medicare, a patient can go to virtually any doctor and any specialist physician and Medicare pays the cost, minus a co-pay. Only 7% of US physicians opt-out of Medicare assignment, meaning they don’t accept Medicare reimbursements as full payment, a requirement for qualifying for treating Medicare patients.
If you are on a Medicare Advantage plan and go to a doctor outside your plan’s list of doctors, you’re on the hook for the bill.
If Medicare Advantage plans were in truth better or were better deals financially than traditional Medicare Parts A and B, plus Part D, the companies offering them wouldn’t be resorting to the aggressive and costly promotional campaigns they currently employ, with sales reps calling older people’s phones day and night endlessly and making major ad buys on TV networks and the internet. They wouldn’t be resorting to costly come-ons like offers of free gym memberships and dental and drug insurance coverage either (which Congress in its “wisdom” bars government Medicare from doing in its traditional plans). The health care industry is the biggest advertiser on television and ads for Medicare Advantage are a big part of that spending, especially on networks whose viewership skews heavily toward older persons, like CBS.
The main “advantage” Medicare Advantage plans offer, in fact, is not a benefit to subscribers, but rather to shareholders and corporate executives in the health insurance industry C-suites. It is an advantage that the companies get over traditional Medicare courtesy of Congress and the White House, which both over the course of three presidential administrations and alternating party control over the houses of Congress, been actively encouraging people to move out of government insurance and over to the private sector. The big carrot is a bonus paid annually to insurance companies for enrolling patients who are characterized as sicker, frailer, older or more seriously injured – a bonus that traditional government Medicare does not get.
Companies offering Medicare Advantage plans received an annual fee of over $12,000 for each subscriber from the federal government. But at the same time they have been raking in those fees, the industry also stands accused of sucking up more federal money by misclassifying upward the medical problems of their subscribers, for which they then receive higher reimbursements for coverage of the patient medical bills. Federal investigators claim that over the past three years, Medicare Advantage insurance firms have bilked taxpayers and the Medicare program by over $30 billion by inflating patient health conditions and risk classifications that led to over-compensation by Medicare for their costs of covering subscriber hospitalizations. In 2015 an audit by the Health and Human Services Inspector General’s Office found Humana, another major player in the Medicare Advantage business, bilked Medicare of $200 million just for its plan in Florida by overstating how ill their patients actually were. And those princely sums are not all the fraud that is going on through this scam. The feds were only auditing some of the accounts, not the whole system.
The annual fees alone for signing up 24 million elderly and disabled people into MA plans and keeping them or luring them off the traditional government Medicare rolls came to $288 billion in 2020. Total spending on Medicare that year was $776 billion, meaning that the payment to the MA industry for patient care to their covered patients that year represented more than a third of the total federal outlay on the program!, not counting the fraud for subscriber medical condition inflation.
No wonder the industry is advertising for new subscribers so aggressively.
The reason for that government per enrollee fee – technically a pre-payment for the estimated average cost of care of each MA policy holder – is that what the Medicare Advantage insurers like Humana, Blue Cross/Blue Shield, Aetna and United Healthcare, etc., want is younger and healthier subscribers to their plans, leaving the genuinely sickest, costliest elderly and disabled to the public plans. The MA companies are required under the law to accept all comers who are Medicare eligible, regardless of condition, age, etc., and to charge everyone the same, but these companies have ways of getting around that. The theory is that if they can keep the cost of care for their subscribers down they can pocket more profits, but the flaw in that thinking, if it is a flaw of course, is that to keep those costs down, the MA companies, like the health insurance industry as a whole does, works hard to keep costly treatments and specialist visits to a minimum so as to stay under that annual amount for as many of their subscribers as possible.
The first way they can do that is by limiting access to specialists. If they only have a limited number of each type of specialist in their system, and the plan participant is not happy with what’s available geographically and ends up going to a specialist she has known for years, or who was recommended by a friend or maybe even by a primary care physician in the plan, that person could end up being responsible for the whole bill. Experts warn that out-of-pocket costs not covered by your MA plan, can soar as you get older, for co-pays, deductibles, out-of-system doctors, etc. Or you may flat out be denied a recommendation for treatment by the plan’s primary care physicians, who can be financially disincentivized by the insurer from recommending too many specialists or too many costly treatments. The 2021 cap per year and per Medicare advantage subscriber for out-of-pocket medical expenses is $7550, a sum which for many people on fixed incomes could be a huge blow. If it’s a two-person household and both have a significant medical issue in one year, that would be a cap of $15,100 they’d have to come up with, and with older or disabled people, a major medical problem requiring significant medical care could well be a multi-year or even permanent annual expense.
That’s where things can get really sticky. Once you’ve enrolled in a Medicare Advantage plan initially – even a good one that might work out really well for you when you’re relatively young and healthy. say in the 65-75 bracket- when you get older and find that the plan is not good for you anymore because of the number of specialists you are seeing and treatments you are requiring for which there are out-of-pocket costs piling up that you would not be facing if you were on traditional government Medicare A and B, you may find yourself stuck.
There are other problems with Medicare Advantage plans too. Most are tied to a geographic area. If you are healthy and travel, and get sick out of the area, you could find yourself paying plenty for out of system care and fighting for reimbursement.
You could of course switch to the traditional government plan B, and also buy into Part D for your drugs, but Medicare itself can end up leaving you with big bills since it has an annual deductible of $203 for Part B, after which you pay 20% of the cost of doctors bills for care not delivered in a hospital. For Part A, there is a patient responsibility deductible for a hospital stay of $1484 for the first 60 days in the hospital and $371 per day for the next 30 days. If you go into a rehab nursing facility, your share of that cost would be $185 per day. These are big numbers.
You could, theoretically, do what is recommended at the time you first apply for your Medicare at 65, which is to purchase a Supplemental Medigap insurance policy, but unfortunately, these plans are unregulated by the federal government, but rather by each state. Thanks to the Obama administration and Congress, Medigap plans were exempted by Congress and all but four state legislatures from putting limits on coverage for “pre-existing” conditions, or from increasing premiums exorbitantly for those with such conditions. In other words, if you waited until you got older and sicker or became disabled with chronic conditions, and then try to switch back to traditional government Medicare and and buy a Medigap plan to cover all those extra bills not covered by traditional Medicare, as well as the cost of meds, you may find yourself priced out of the marker or not even allowed to by such coverage.
People get into Medicare advantage plans in large part because they are being advised to do so by expensive corporate marketing programs, large ad campaigns, and by both active promotion by government and by regulations that don’t allow Medicare to compete with the MA plans.
The Obama administration did a big favor to Medicare Advantage companies when it passed the Affordable Care Act, with its ban on the ability of insurers to exclude from coverage “pre-existing conditions,” probably the most widely appreciated part of the ACA, but exempted so-called Medigap plans intended to cover the holes in traditional Medicare from that same ban.
In 2019, for instance, President Trump signed an executive order – one that was slipped by without the usual Oval Office media show – which allows the government to involuntarily enroll people in MA plans rather than the old default of government Medicare. It also ordered the Secretary of Health and Human Services to actively encourage MA plan sponsors to offer marketing deals like gym memberships and dental plans to attract healthy subscribers, while banning Medicare itself from including such offerings. The order also makes it easier for physicians to opt out of the Medicare program.
“They shouldn’t call them Medicare Advantage plans!” says an angry Ralph Nader. “They should call them Medicare Disadvantage plans!”
Nader and other critics of the private insurance option to the traditional government single-payer Medicare program initially created by President Lyndon Johnson and approved by a Democratic Congress in 1966 as part of his so-called “Great Society” program, see what is happening as a sneak attempt to undermine and eventually eliminate public Medicare. The attack involves removing all the relatively healthy Medicare beneficiaries from traditional government Medicare, leaving the public program with only hugely costly elderly, the very ill and the very disabled, at which point its high cost and reduced numbers of enrollees will encourage its defunding, leaving the elderly and disabled only with Medicaid – a poverty insurance option not accepted by most doctors that is basically a last-chance medical welfare program for people without the funds to buy private medical insurance.
Judy Stein is executive director of Medicare Advocacy, a Willimantic, CT-based advocacy and public-service law organization that promotes access to full comprehensive coverage under Medicare. (The organization which does analysis and policy work, also offers legal assistance for people within the state of Connecticut who are having problems getting coverage under Medicare.) Stein argues that for most people who are Medicare eligible, “The best option is to not get a Medicare Advantage plan. Get on traditional Medicare A and B and then buy yourself a good Medigap plan.” That way, she explains, people won’t be caught unable to buy a Medigap policy if and when they find that their Medicare Advantage plan is no longer an advantage to them.
Medicare Advantage, in fact, is like a Roach Motel, a cockroach trap with sticky glue-like adhesive on the inside that grabs any entering roach’s legs and renders it immobile, hence the slogan: “Roaches check in but they can’t check out.”
Take the case of Mr. G, a retired professional in his 80s who was enrolled in traditional Medicare with Part A, B, and D and a Medigap plan to take care of his copays and deductibles. Afflicted with Parkinson’s disease, he suffered a bad fall and after a period of hospitalization went to a skilled nursing home for rehab.
While in the rehab facility, Mr. G saw a TV ad for a Medicare Advantage plan promising “zero payment,” and figuring it sounded like a good way to get rid of the monthly payment he was making to the government for his Medicare Part B and D coverage, he called the listed phone number and got a representative who assured him he would save money by enrolling, which he did over the phone with an effective date of Jan. 1, 2020.
Mr. G was not informed by the salesperson that the plan he had switched to, leaving behind his traditional Medicare, was an HMO and that many of his physicians and care providers were not in that company’s network. On Jan. 2, a day after the switch in coverage occurred, he was to be discharged from the nursing facility and sent home. That’s when he was informed that he was “no longer in fee-for-service Medicare” and that his new private insurance company would not pay the home health agency he and his family had speny considerable time locating to care for him when he returned home. Nor would they pay for visits to his long-standing primary care physician, who was not in the network.
Fortunately, the Center for Medicare Advocacy, which he called, was able to tell him that because he was in the Medicare Advantage Open Enrollment Period, which luckily runs from Jan. 1 – March 31, he was able to dis-enroll from the wholly unsuitable Medicare Advantage plan and switch back to his old traditional Medicare A, B and D plans. If he had switched after March 31, things could have been worse. But there was remained the issue of his need for a Medigap plan. The state he lives in, like all but four states (Connecticut, Massachusetts, Maine, and New York), restricts Medigap plan enrollment (for no good reason!) to a certain time of year, and also allows those plans to deny coverage for pre-existing conditions, like Mr. G’s injuries from the fall and his Parkinson’s disease. It appeared likely that no Medigap company would accept him as a subscriber anymore. Luckily for him, it was discovered on an investigation that Mr. G’s family had been paying for his prior Medigap policy in three-month installments, so he was technically still paid up and was able to continue without any break as an enrollee in the plan he had been enrolled in and with no pre-existing condition included.
Many victims of this widespread aggressive marketing by Medicare Advantage insurers are not so lucky and end up stranded without access to medical insurance. They then either have to pay for a MA plan that doesn’t meet their needs and leaves them with huge out-of-pocket expenses, or they’re stuck in traditional Medicare but without the supplemental gap insurance needed to prevent them from having huge bills that could bankrupt them or their family, or leave them with nothing but Medicaid. Of course many of the scams that leave people in the lurch are illegal, and could conceivably be refersed through legal action as happened when Mr. G went to a public interest lawfirm willing to help him, the victims tend to be old, disabled and on fixed and ofte quite limited incomes, and even if they can muster the energy to fight back may not be able to afford or interest a pro bono attorney to take their case.
These kinds of issues are not widely reported, while the slippery and misrepresented promotion of Medicare “Advantage” plans are shamelessly promoted both by corporate marketing budgets and by government agencies like the Center for Medicare and Medicaid Services (CMS), the Department of Health and Human Services, and politicians anxious to cut the Medicare budget but unwilling to state that openly to their many Medicare-dependent constituents.
Susan Rogers, president of Physicians for a National Health Plan (PNHP), says, “People who reach Medicare eligibility need to know that when they sign up for the program and are deciding whether to go with the traditional government or a private Medicare Advantage plan, they’re buying health insurance not for today but for the future. If they’re relatively healthy at 65 and select an attractively marketed Medicare Advantage plan that works for them at first, they are going to run into trouble as they get older, frailer, and sicker. Also, the premium they initially are looking at can go up, and there’s nothing they can do about it.”
“Starting next year,” she warns, “the government is talking about testing something called ‘The Deal,’ where whole Medicare-eligible populations in certain geographical markets will be put into Medicare Advantage plans whether they want it or not.” The idea is presented as a test to see how that system works.
“It’s really a back-door way of privatizing Medicare,” she says, “a process that with voluntary sign-up for Medicare Advantage plans is already well underway.”
Wendell Potter, who left a position as public relations director for Cigna, a major health insurance company, to become a major critic of the private medical insurance industry, says that progressive Democrats who are pushing for a Medicare for All program that would open up that system to people of all ages, instead of just those over 65 and the disabled, need to wake up. “They need to realize that such a plan first has to be dramatically improved, not just expanded to include more people,” he says.
“There needs to be a cap on out-of-pocket expenditures for treatment in traditional Medicare. As it is you can be left on the hook for $20% of the costs of Part B and for hospital co-pays and deductibles, and these days those amounts can be enough alone to put you into bankruptcy, he says. “And for god’s sake traditional Medicare needs to include dental care! That’s something the private Medicare Advantage industry is fighting tooth and nail because they’d lose their ‘advantage’ in marketing themselves.” He adds, “And AARP [the American Association of Retired Persons] is complicit, because they are offering Medicare Advantage plans themselves.”
This piece was co-published with Counterpunch.org.