Medicare Disadvantage

While there has been a lot of attention paid to the ways in which George Bush’s changes to Medicare have benefited insurance companies, such as by not allowing negotiations over price, the benefits to insurance companies from Medicare Advantage plans has received less attention. Besides the political implications of the manner in which Bush has used his Medicare plans as a tremendous corporate welfare program to benefit his major contributors, there are aspects of the plan which health care consumers need to better understand. The Argus provided such warnings yesterday:

Targeted by aggressive marketers, some East Bay seniors are switching to Medicare Advantage plans they don’t fully understand, only to discover they can no longer see their longtime doctors and have severely limited their choice of specialists.

The plans are beneficial for some people. But consumer advocates advise seniors to proceed with caution and to seek free counseling before making a decision.

Limited choice of doctors? It is certainly ironic that the Republicans have devised a plan which suffers from one of the problems conservatives usually complain about in foreign plans.

While those who shop carefully might receive advantages, many do not as a consequence of dishonest marketing of Medicare Advantage plans. Private insurance companies receive twelve percent more to care for Medicare patients than those covered under the government’s Medicare program despite often cherry picking the healthier patients. So much for Republicans trusting the free market to provide services more economically. Rather than being used to provide benefits to beneficiaries as mandated by law, the money is largely used to increase corporate profits at the taxpayers’ expense. This provides considerable motivation to deceive seniors into joining the plans, with many plans paying salespeople a bounty for each person they sign up, without caring what they do to make the sale.

The New York Times reviewed the improper sales tactics used last spring, and last fall the Times reviewed audits reports on the Medicare Advantage plans. In an editorial last month they called on Congress “to eliminate the unjustified subsidies that give private plans a competitive advantage over traditional Medicare.” The editorial outlined some of the problems:

As Robert Pear reported in The Times last week, unscrupulous insurance agents have tricked people into dropping traditional Medicare coverage and enrolling instead in private plans that do not meet their needs. Agents typically receive $350 to $600 for each patient they enroll in a private plan. Some try to boost sales by pretending to be Medicare officials, forging signatures or hiding the fact that a patient’s doctor will not be part of the private plan. Others barge into homes and use high-pressure tactics to push poor, semiliterate people into a private plan.

The American Medical Association has also called for fiscal neutrality between Medicare Advantage and traditional Medicare. CBS News reported on the deceptive sales practices being used to sell the plans last summer. Barack Obama spoke out against the plans while campaigning in Iowa.

While anecdotal evidence might not be representative, I’ve found that the vast majority of patients enrolled in Medicare Advantage plans have no understanding of what they are signed up for. The Oklahoma insurance commissioner provides just one example of a state investigating and finding the same problems. The insurance commissioner found that many who thought they were signing up for simply a drug plan were being signed up by Humana into their Medicare Advantage plan.

Many patients have told me that salespeople tell them the plan is only a supplement to their regular Medicare. Sometimes salespeople bribe the residents of a senior citizen complex to attend a meeting with meals or other incentives, and then use hard sell tactics to get the bulk of them to sign up without understanding what they are signing. I’ve even seen patients enrolled in Medicare Advantage plans who do not recall ever signing anything. Possibly they did sign something, but who know what they were led to believe they were signing at the time.

As The Argus warns above, those who sign up in plans could find that their physician does not accept their plan. This month I had one patient have to postpone surgery until she could get out of a plan that wasn’t accepted. I’ve also seen a number of patients wind up with higher copays or a higher deductible than they had under Medicare. Sometimes the plans offer benefits not included in the usual Medicare program, but there could be a catch. I have one patient who signed up for a plan that includes dental coverage, but not a single local dentist accepts the plan. The plans are also a nuisance for physician offices when patients do not realize their plan has changed. Even Medicare does not realize when patients have switched for a while. Quite often I’ve seen letters from Medicare requesting money back which they paid on patients months earlier, but Medicare. the patient, and the physician were all unaware of this at the time.

Sometimes patients might benefit from Medicare Advantage plans if they have the opportunity to investigate their options and receive honest information as to what is covered. Those who benefit the most are generally those who choose to purchase higher priced plans as opposed to the plans people are typically placed into without their knowledge. Greater effort needs to be taken to weed out the deceptive sales tactics, and when Medicare is strapped for money their is no justification for paying these plans an extra twelve percent to care for patients.

(Cross posted at The Carpetbagger Report)


  1. 1
    The Charters Of Dreams says:

    Bleating and preening: “So much for Republicans trusting the free market to provide services more economically.”

    Free Market?!! Are you out of your mind?!

    Just about everything you’re complaining about derives from the fact that socialized Medicine is Already here. The government already finances about half of Americans’ medical care, so you might say our system is already half-socialized. Yet we are much farther along the road to socialized medicine than even that would suggest.

    Consider two distinguishing features of socialist economies. The first is that the government decides what individuals may produce, what they consume, and the terms of exchange.

    That is largely true of America’s health care system. Government controls production and consumption by determining the number of physicians; what services medical professionals can offer and under what terms; where they can practice; who can open a hospital or purchase a new MRI; who can market a drug or medical device; and what kind of health insurance consumers may purchase.

    Government bureaucrats even set the prices for half of our health care sector directly, and indirectly set prices for the other half. When you read about Medicare over-paying imaging centers and hospitals, or that it’s impossible for Bostonians to get an appointment with a general practitioner, it’s largely because the bureaucrats got the prices wrong, and those rigid prices do not automatically eliminate shortages and gluts like flexible market prices do.

    A second feature of socialist economies is that there is little incentive to make careful economic decisions, because government has put everyone in the position of spending other people’s money.

    How can America’s health care system be “socialized” when we rely on the private sector more than any advanced nation you ask? Well Ron, it’s because it doesn’t matter whether the dollars and the hospitals are owned publicly or privately. What matters is who controls how they are used.

    In 2007, the average family of four will pay $25,000 for health insurance — nearly 30 percent of their income. About $14,000 represents taxes that fund health programs for the elderly and the poor. In other words, the government controls the lion’s share.

    The remaining $11,000 purchases the family’s own coverage, usually through an employer. Though we count that as “private” spending, the government largely controls that $11,000 as well.

    How can our system be “socialized” if we don’t force patients to wait for care, as other nations do you ask? America does ration by waiting — just ask any Medicaid patient — though we do so less often than nations where governments arbitrarily limit medical spending.

    The East Bay seniors are the victims of a de facto socialized health care in America — and it’s only going to get worse. See:

    Medicare Meets Mephistopheles

    From a review of Medicare Meets Mephistopheles:
    “Let’s say you’re the devil, and you want to corrupt the American republic. How would you go about it? According to David Hyman, you might create something like Medicare, the federal health care program for the elderly. Hyman submits that Medicare may be the greatest trick the devil ever played. Medicare feeds on the avarice of doctors and other providers, turns seniors into health care gluttons, and makes regions of the United States green with envy over the dollars showered on other regions. The program exploits the sloth of government officials to increase the tax burden on workers and drag down the quality of care for seniors. Medicare makes Democrats lust for socialized medicine, while its imperviousness to reform makes Republicans angrier and angrier. Most of all, Medicare allows its ideological supporters to bleat and preen their way to the heights of moral vanity. In the style of C.S. Lewis’ The Screwtape Letters, Hyman writes that Medicare has freed the self-interest of these mortals from its natural restraints. As a result, the seven deadly sins have blossomed. With epic political battles over Medicare and the future of limited government looming just over the horizon, Hyman uses satire to cast a critical eye on this mediocre government program.”

  2. 2
    Ron Chusid says:

    The Medicare Advantage plans are the Republicans’ idea of a free market change to Medicare.

    The government has no say over things like where physicians can practice.

  3. 3
    The Charters Of Dreams says:

    OK, but that’s like saying “other than that, Mrs. Lincoln, how did you like the show?”

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