The choice between traditional Medicare and Medicare Advantage? It’s easier than you think. (PART 2)
If all things were equal, the choice between traditional Medicare and Medicare Advantage is easier than you think, as I wrote in a previous post. But as one reader commented, there’s more to it than I could include in that post.
Here’s part two, explaining why about half of all people with Medicare are now enrolled in the privatized Medicare option: Medicare Advantage.
Traditional Medicare’s upfront costs are high
Traditional Medicare does not have an out-of-pocket cap. Unless people have supplemental coverage to pick up their out-of-pocket costs, their upfront costs in traditional Medicare are high. They easily could spend $3,000 on supplemental coverage and Part D prescription drug coverage. And, that’s on top of their Medicare Part B premium.
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Millions of people cannot afford supplemental coverage; the typical person with Medicare has an annual income of less than $30,000. So, people with lower incomes are more likely to enroll in Medicare Advantage, which has an out-of-pocket limit and few, if any, upfront costs. Not surprisingly, wealthier individuals are more likely to enroll in traditional Medicare.
In truth: You’ll spend less out of pocket in traditional Medicare with supplemental coverage than in Medicare Advantage when you need costly care and have direct access to the care you want. Cost will not be an obstacle to care as it can be in Medicare Advantage.
To save money, employers and unions steer retirees into Medicare Advantage
Increasingly, companies and unions offering retiree benefits contract with Medicare Advantage plans to cover their retirees’ care. The Medicare Advantage plans are willing and able to offer companies and unions special benefits to enroll their retirees, better than what they offer people in the individual market, because the Medicare Advantage plans profit more through these contracts than in the individual market. And companies and unions save money on the cost of supplemental coverage.
In truth: Millions of people with retiree benefits lose their easy access to care, choice of doctors and hospitals, and coverage anywhere in the U.S. without their consent.
Medicare Advantage marketing misleads people about their benefits
Medicare Advantage plans use taxpayer dollars to promote their benefits and to claim they are better than traditional Medicare. A lot of the marketing is misleading about the benefits people will get in Medicare Advantage. The government does not use taxpayer dollars to promote traditional Medicare, let alone to explain why it is better than Medicare Advantage.
In truth: No one should trust the Medicare Advantage TV ads or mailers.
Sales agents steer millions of people into Medicare Advantage
Sales agent commissions for enrolling people in Medicare Advantage are significantly higher than commissions for enrolling people in traditional Medicare. As a result, sales agents have a financial incentive to steer people into Medicare Advantage.
In truth: No one should trust sales agents; they should use independent, unbiased advisers, such as State Health Insurance Assistance Programs.
People aren’t told that a Medicare Advantage plan might not meet their needs
The government suggests that people can pick the Medicare Advantage plan that’s right for them. But, the government does not make data available about key differences among Medicare Advantage plans on Medicare Compare or anywhere else. For example, people don’t know about rates of denial, disenrollment or mortality in different Medicare Advantage plans. Moreover, people do not know what their future needs will be and how the Medicare Advantage plan they choose will meet them.
The Centers for Medicare and Medicaid Services’ “Medicare & You” handbook does not warn people that some Medicare Advantage plans engage in widespread and persistent inappropriate delays and denials of care, let alone which ones. Medicare’s five-star rating system of Medicare Advantage plans is largely a farce.
In truth: People, who elect Medicare Advantage must gamble on whether they will get the care they need.
Medicare Advantage plans generally cover fewer services than traditional Medicare
While in theory, Medicare Advantage plans should cover people for the same medically reasonable and necessary services traditional Medicare covers, in practice they do not.
People generally don’t know about high rates of inappropriate delays and denials of benefits in some Medicare Advantage plans, let alone which plans have the highest such rates. They also do not know which Medicare Advantage plans have high voluntary disenrollment rates, particularly for people with costly conditions or high mortality rates.
In truth: Medicare Advantage plans profit from delaying and denying care, and the government does not have the tools or resources to hold them accountable when they are bad actors.
Additional benefits in Medicare Advantage might not be valuable
Medicare Advantage plans market their dental and vision benefits, gym memberships and other freebies not available in traditional Medicare. There’s almost no data on the value of these benefits or to show who is able to use these benefits and whether out-of-pocket costs or limited access make them less beneficial than they appear.
In truth: Enrollees often can’t take advantage of these additional benefits; they can come with high out-of-pocket costs and limited provider networks.
Medicare Advantage costs can be an obstacle to care
There’s little information about typical out-of-pocket costs in Medicare Advantage plans, let alone typical out-of-pocket costs for people with different health conditions, such as diabetes or cancer. The Medicare Advantage plans do not make this information available. The government’s “Medicare & You” handbook does not include information on out-of-pocket limits in Medicare Advantage, which can be as high as $8,300 for in-network care alone this year, and significantly more for out-of-network care.
In truth: Medicare Advantage plans impose financial barriers to care that lead some people – particularly those with low incomes and people of color — to skip or delay care when they get sick.
Medicare Advantage prior authorization rules and networks can be an obstacle to care
People do not know what care they will need down the road and whether their Medicare Advantage plan has specialists and specialty hospitals in its network to meet those needs. People often face obstacles such as prior authorization from their MA plans when they need critical care.
In truth: Medicare Advantage plans impose administrative barriers to care that keep some people from getting the care they need.
Traditional Medicare is not always an option once people enroll in Medicare Advantage
People are told that they can switch Medicare Advantage plans and switch to traditional Medicare each year during the Annual Open Enrollment Period. But most people don’t know that, except in Maine, Massachusetts, Connecticut and New York, they have no right to buy supplemental coverage that fills gaps in traditional Medicare after they first enroll in Medicare, with limited exceptions. They also don’t know that companies selling supplemental coverage generally can charge them much higher rates based on their health status if they switch out of Medicare Advantage.
In truth: People are often locked into Medicare Advantage once they enroll.
For sure, the upfront costs of Medicare Advantage are lower than the upfront costs of traditional Medicare, which requires people to have supplemental coverage to protect themselves from high out-of-pocket costs. The big concern with Medicare Advantage plans is that some of them inappropriately delay and deny critical care, charge unaffordable copays that prevent people from getting care, and have networks with poor quality providers. You might be fortunate enough not to need a lot of care or to be enrolled in a Medicare Advantage plan that does a decent job of getting you the care you need at the moment. Be aware that could change at any time. There's also no doubt that the for-profit Medicare Advantage plans will put the needs of their shareholders first. And, in Medicare Advantage, maximizing profits comes in large part from minimizing care.
Fantastic article and such a great resource! It blows my mind (and scares the hell out of me now that I am having to make decisions like this) that I have to spend one second of my life as I approach old age making sure our sociopathic, predatory, for-profit medical system doesn't make my life a nightmare! So glad to have become aware of Wendell Potter and all the resources he shares like Diane's great article here!