This commentary is by Jane Katz Field, M.D., a retired pediatrician who practiced in Brattleboro. She is vice president of the Vermont chapter Physicians for a National Health Program. She lives in Putney.
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 that, with the help of misleading marketing and celebrities like Joe Namath, have enrolled about 40% of American seniors.
Medicare Advantage 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 Medicare Advantage, 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.
Medicare Advantage plans tempt enrollees with low monthly premiums and certain benefits, such as 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 Medicare Advantage because you won’t need to buy what’s called “supplemental coverage,” which covers gaps in traditional Medicare.
But, for Medicare Advantage 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% 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 Medicare Advantage 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, Medicare Advantage 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% of the cost of chemotherapy, which amounts to tens of thousands of dollars per year.
Perhaps most shocking is how Medicare Advantage plans avoid paying for expensive end-of-life care. As a result, Medicare Advantage 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 Medicare Advantage members return to traditional Medicare, there’s no guarantee they’ll be accepted for a supplemental Medigap plan.
Medicare Advantage 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 Medicare Advantage plans a flat fee based on how serious the enrollees’ health problems are. For example, if a kidney test is only slightly abnormal, Medicare Advantage 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 Medicare Advantage plans 4% more than the cost of care in traditional Medicare.
Despite how much Medicare Advantage 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 Medicare Advantage 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.
