Hidden Costs of Medicare Advantage Plans

The Medicare Advantage plans were set up by George Bush to reward the insurance companies for their contributions. The plans pay large subsidies to care for Medicare patients. As a result, it takes from 13 percent to 19 percent more to care for patients in Medicare Advantage plans than in the government Medicare program. Most of this extra money goes to increase profits for the insurance companies. Some  plans use a portion of the money to provide benefits such as health club memberships.

These extra benefits often don’t turn out to be a good deal for patients. Many don’t use the exercise programs, and often patients in Medicare plans do have access to exercise facilities. I’ve had patients who signed up for Medicare Advantage plans which promised dental benefits only to find that there weren’t any dentists in the area who actually accepted the plan.

Health insurance plans should be judged primarily on their health care benefits, but often the extra benefits are offset by higher out of pocket expenses for routine health care. For example, Medicare patients who do not have a secondary insurance pay 20 percent of  Medicare allowed amounts for office calls. Many Medicare Advantage plans have copays of $15 to $30 which exceed the 20 percent Medicare copay. There is no copay for laboratory testing in the government Medicare program but some Medicare Advantage plans do have a copy for lab work.

The Washington Post has an article on the hidden costs of the “free” perks from Medicare Advantage plans:

The trouble is, the extra benefits are not exactly free; they are subsidized by the government. And some of the plans pass their costs on to seniors, who pay higher co-pays and additional fees to get care.

“It’s a wasteful, inefficient program and always has been,” Sen. John D. Rockefeller IV (D-W.Va.) said at a recent hearing. At its core, Rockefeller added, Medicare Advantage is “stuffing money into the pockets of private insurers, and it doesn’t provide any better benefits to anybody.”

President Obama has proposed cutting more than $100 billion in subsidies over 10 years, a contentious component of health-care reform that will be fought in earnest as the bills move through Congress. But unlike some issues that touch off partisan sparring, Medicare Advantage has an unlikely band of bipartisan defenders who have already battled to restore $10 billion of the proposed reductions.

In a health-care debate defined by big numbers and confusing details, the prospect of losing benefits such as a free gym membership through the Silver Sneakers program is tangible, and it has spooked some seniors, who are the nation’s most reliable voters and have been most skeptical about reform.

Medicare Advantage was established in the 1970s (under a different name) when private insurers convinced Congress that they could deliver care at lower costs than Medicare. The program blossomed in the late 1990s when Congress bolstered it with millions in additional federal subsidies to for-profit HMOs. It has proven popular among younger, active seniors who had managed-care plans as workers, and about a quarter of Medicare’s 45 million beneficiaries are enrolled.

Many private plans require no additional monthly premiums, yet the government pays an average of $849.90 in monthly subsidies to insurance companies for a person on Medicare Advantage, according to the Kaiser Family Foundation. That is about 14 percent more than the government spends on people with standard Medicare, according to the nonpartisan Medicare Payment Advisory Commission.

“The promise of Medicare Advantage and Medicare HMOs was to save the government money, to save consumers money, all the while providing additional benefits and coordinating care,” said Joseph Baker, president of the Medicare Rights Center. “That promise has been unfulfilled overall because the plans are overpaid by the federal government at this point.”


  1. 1
    Greedy Trial Lawyer says:

    RT @SeniorBiz: » Hidden Costs of Medicare Advantage Plans http://tinyurl.com/yhg3kfx ► 13-19% more; increased ins co profits

  2. 2
    greedytlawyer says:

    RT @SeniorBiz: » Hidden Costs of Medicare Advantage Plans http://tinyurl.com/yhg3kfx ► 13-19% more; increased ins co profits

  3. 3
    Greedy Trial Lawyer says:

    RT @SeniorBiz: » Hidden Costs of Medicare Advantage Plans http://tinyurl.com/yhg3kfx ► 13-19% more; increased ins co profits

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