By Jane Katz Field, M.D.
Brattleboro (Vt.) Reformer, September 27, 2021
The Medicare Annual Enrollment Period starts Oct. 15, which means people over 65 will be inundated with ads encouraging them to sign up for what’s called “Medicare Advantage.” While Medicare Advantage (also called Medicare “Part C”) sounds like it’s part of traditional, nonprofit Medicare, it’s actually operated by commercial, for-profit insurance companies, who, with the help of misleading marketing and celebrities like Joe Namath, have enrolled about 40 percent of American seniors.
Medicare Advantage (MA) is different from traditional Medicare in a few important ways. Traditional Medicare uses a transparent, straightforward “fee for service” system to pay clinicians and hospitals for patient care. However, under MA, the government pays commercial insurance companies a fixed monthly amount for each subscriber, allowing insurers to keep as profit what they don’t pay out for care.
MA plans tempt enrollees with low monthly premiums and certain benefits, like routine vision, hearing, (limited) dental coverage, and gym memberships. But these low upfront premiums mask the hidden costs that appear when you actually need care.
If you’re lucky and stay healthy, you can initially save money with MA because you won’t need to buy what’s called “supplemental coverage,” which covers gaps in traditional Medicare. But, for MA recipients, when you get sick, you discover that the insurer’s “network” doesn’t include the specialist you need to see, so you either go without care, or pay out of pocket. Then, the plan might refuse to authorize tests and procedures your doctors order and stick you with high copays for treatments, and deductibles for prescription drugs, that add up to thousands of dollars a year.
Traditional Medicare does impose some costs, such as a 20 percent coinsurance, but most enrollees cover those by purchasing a supplemental “Medigap” plan, for about $2,000 per year. By comparison, average out-of-pocket expenses for MA members in 2021 was $5,000 for “in network” services and close to $10,000 for “out-of-network” services not covered by the insurer.
Besides imposing massive costs for treatment of complex health issues, MA plans turn a profit by selectively recruiting healthy, low-cost (and therefore profitable) patients, while driving unhealthy, unprofitable ones back to traditional Medicare, which must cover everyone. They dangle flashy perks like gym memberships or even free sneakers, knowing that new sneakers aren’t much use to those with chronic or disabling health conditions. And then they require cancer patients to pay up to 20 percent of the cost of chemotherapy, which amounts to tens of thousands of dollars per year.
Perhaps most shocking is how MA plans avoid paying for (expensive) end-of-life care. As a result, MA members in their last year of life disproportionately leave these plans to enroll in traditional Medicare so as not to bankrupt their families as they are dying. But when MA members return to traditional Medicare, there’s no guarantee they’ll be accepted for a supplemental Medigap plan.
MA plans also make money by aggressively “up-coding,” which means they embellish diagnosis codes to exaggerate how sick a patient really is. Upcoding inflates insurers’ bottom lines because the government pays MA plans a flat fee based on how serious the enrollees’ health problems are. For example, if a kidney test is only slightly abnormal, MA plans will get more money by coding it as “renal failure” — a complex and potentially deadly diagnosis. As a result of pervasive upcoding, taxpayers pay MA plans 4 percent more than the cost of care in traditional Medicare. Despite how much MA plans limit patient choice and access to care, they aren’t saving taxpayers any money. In 2019, the federal government spent $321 more per-person for MA enrollees than it would have if those enrollees had been in traditional Medicare.
Commercial insurers have had long enough to prove that they could improve care and cut costs, and they have failed at both. The only way to achieve these goals is by eliminating the waste and profits of commercial insurers and moving to a Medicare for All system, which would save hundreds of billions of dollars a year while covering everyone of all ages for all medically necessary care.
Dr. Jane Katz Field is a retired pediatrician. She is vice president of the Vermont Chapter of the Physicians for a National Health Program.