12/01/2022
When the annual enrollment period for Medicare ends on Dec. 7, analysts expect that, for the first time, more seniors will receive their 2023 health-care coverage from Medicare Advantage than the traditional program.
That’s not a good thing for either elderly Americans or federal coffers. And while seniors are well advised to approach these plans with caution, we should all be paying attention to what’s going on.
Medicare Advantage plans, which are private insurance plans for seniors paid for with federal dollars, originated as a government savings strategy, on the theory that the private sector could improve on government performance at a lower cost. But over the past two decades, it has become clear that Medicare Advantage does not result in improved care for less money. Instead, it will come as no surprise to Americans familiar with the health insurance industry that insurers found a way to turn it into yet another profit center, while putting bureaucratic roadblocks in the way of patients.
The problems are so pronounced that Reps. Ro Khanna (D-Calif.) and Mark Pocan (D-Wis.) — both advocates of Medicare-for-all — recently introduced little-noticed legislation that would ban private insurers from using the word “Medicare” in their names or advertisements.
“Medicare implies universal coverage. You can go to any doctor, you can get your claims reimbursed,” Khanna told me. “You shouldn’t be able to appropriate the trust and faith people have in Medicare to sell a private product for personal profit that doesn’t have the same rules.”
[David Goldhill: In health care, America is the world’s indispensable nation]
Insurers in Medicare Advantage are paid a flat fee by the government, based on the enrollee’s health. These insurance companies often want their members to appear as ill as possible — at least as far as the Feds are concerned. They might “upcode,” in doctor speak, maximizing the amount of money they receive. (The federal government calls that practice “fraud” and has sued several of the largest insurers in federal court for it, including Anthem and Cigna, in cases still ongoing.)
As a result, multiple studies have found that seniors on Medicare Advantage cost the government more than those in the traditional program, exactly the opposite of what is intended. A government advisory panel recently estimated the overpayment was $12 billion in 2020.
This flood of money is fattening the bottom line of the health insurance giants even as they’re increasing pressure on the Medicare Hospital Insurance Trust Fund, which is projected to run out of funds in 2026. And Congress is loath to crack down, thanks to the combined power of health insurance lobbying and the program’s popularity with cash-strapped seniors.
Meanwhile, it’s not like seniors are getting better care for the money the federal government is spending — in fact, it can be worse. A research brief posted on the National Bureau of Economic Research website found picking the right plan could literally be a matter of life or death.
It’s “widespread” for Medicare Advantage plans to initially deny coverage for doctor-advised care, according to a report released this year by the Department of Health and Human Services. Plans erect roadblocks to treatment by demanding prior authorization for services traditional Medicare covers without questions. Plans can — and sometimes do — refuse to cover necessary prescription drugs. There are increasing complaints that private insurers rush patients out of skilled nursing and rehab facilities.
So why do people sign up? Traditional Medicare is not simple. It’s a complicated stew of different parts — for hospitalization, for doctors and for prescriptions. Seniors might feel they have to purchase supplemental coverage known as Medigap, which helps cover the co-pays and deductibles that Medicare does not cover.
Many Medicare Advantage plans eliminate or significantly reduce these out-of-pocket costs, as long as beneficiaries stay within their approved network. The private policies also frequently offer vision and dental coverage, not to mention gym memberships, something not on offer in Medicare itself.
These extras have an appeal. But a streamlined plan that can end up costing seniors more is no bargain — and Medicare Advantage sometimes relies on deceptive marketing to get them in the door. A report issued earlier this year by the Senate Finance Committee’s Democratic majority found that unscrupulous insurance agents — who are paid significantly more to sign up seniors for Medicare Advantage plans than for the traditional offering — will sometimes be misleading about networks and benefits, and even pursue seniors suffering from dementia. Ads featuring celebrities claim the plans will put more money in seniors’ pockets.
Medicare Advantage defenders are quick to point out that surveys show their enrollees are more likely to receive such preventive health and wellness services as monitoring of high blood pressure than those with the traditional program. But it’s usually when someone gets seriously ill that Medicare Advantage’s weaknesses become clear.
What would be best would be to fix Medicare, to make it more generous to enrollees and less generous to insurers. That’s unlikely to happen. But we can at least insist on calling it out for what it is: Try Medicare Disadvantage.
Private plans for seniors were supposed to save money while providing better care. That's not how it turned out.
