Is a Medicare Advantage plan right for you? (Gettysburg Times op-ed)

As a family physician of 36 years, I have had bountiful experience in dealing with both my patients’ and my own personal health insurance. As I approached the age for Medicare, I had to make the same decision as many of my patients as to what type of supplemental insurance I would purchase to accompany my newly earned Medicare coverage.

I would like to share my understanding of those options and then opine on my decision.

First, it is wise to define a few terms. Traditional Medicare provides direct federal government payment of healthcare for those of us 65 and older as well as younger adults with significant disabilities. On an annual basis participants are required to pay monthly premiums and meet deductibles, $226 for Part B in 2023 and $1,600 for Part A (in-hospital coverage) during a benefit period. Beyond those expenses, there is a 20% co-insurance cost based on allowable charges. A patient can see any provider, physician, nurse practitioner or physician assistant, hospital, etc. that participates with Medicare.

Most of us choose an additional supplemental plan to limit our out-of-pocket expenses.

There are two main categories of supplemental plans. One is the traditional “Medigap” insurance, which provides a federally mandated set of benefits that vary somewhat in plans A, B, G, and K. (See Medicare.gov for differences in coverage and cost.) These plans are offered by many different insurance companies. My plan, a G plan, covers the Part A deductible of $1,600 per benefit period.

The advantages of Medigap plans are that you may see any provider that you want to see without a higher co-pay, you are not limited to the insurance plan’s network of providers, and you are guaranteed re-issue year after year. You may refer yourself to a specialist, you do not need pre-authorization. If you choose a Medigap plan, then it is wise to also choose a Medicare D or prescription plan to cover your prescription-use costs.

The second option to supplement your traditional Medicare is to purchase a Medicare Advantage plan. In these plans, the federal government pays a third party to “manage” your care. Monthly premiums tend to be lower, sometimes $0, but once care is required, these plans may lead to higher out-of-pocket costs. If you have this insurance and you want to have your care covered by this insurance, you are strongly encouraged to stay within the provider network of that policy. Usually a pre-authorization process for additional testing or treatment is required. In-network services’ out-of-pocket costs are generally capped. This cost cap, however, varies from policy to policy. If you choose to go out of network, your out-of-pocket cost may skyrocket. Depending on the plan, out-of-network care costs may or may not be capped. Medicare Advantage plans are required by law to cover the same services as Medicare A and B. Most Medicare Advantage plans provide prescription drug benefits as part of the plan. The additional lure for patients in Medicare Advantage plans is that they are allowed to offer dental, vision and hearing care benefits.

I have talked to friends, family and patients who have told me that they have chosen Medicare Advantage plans for various reasons including the lower premiums, the extra perks of dental, vision and hearing care, and the inclusion of the drug plan benefit. However, buyer beware!

The health insurance industry has found a cash cow in its Medicare Advantage plans and therefore has advertised those plans as being the best thing since sliced bread. I rarely if ever see traditional Medigap plans advertised. Why do you think this might be? For your well-being?

Increased profit drives the insurance industry’s decision to advertise their Medicare Advantage plans. These companies are paid a fixed amount per enrollee. This amount is adjusted up or down based on the “medical risk” or complexity of the individual’s overall health and their conditions that require care. Because these plans are allowed to restrict our care through pre-authorization and limited networks, they reduce their costs and increase their profit margins. When one is denied care, that individual tends to look for other options and potentially leaves this insurance plan. With their departure, the insurance company has one less “expensive” patient. This is referred to in the industry as “lemon-dropping.” In addition to advertising to a healthier crowd, this “cherry-picking” maximizes the insurance company’s profit, but does not improve patient care.

Many insurance companies have been accused of “upcoding” patients with a variety of illnesses and diagnoses, either exaggerating the severity of their condition or adding a condition that does not exist, which results in higher reimbursement to the insurance company for that patient.

Once an individual opts out of a Medigap plan for more than one year, that individual loses the guarantee of being reissued a Medigap plan.

Medicare Advantage plans were allowed to exist because the private health insurance industry lobbied intensely with the message that they could save taxpayers money. In fact, they have not. Traditional Medicare has historically been operated with an overhead of 2.2%. Medicare Advantage plans have cost anywhere from Centene’s 11.7% to United Healthcare’s 17.2% in overhead and profit. In 2021, it is estimated that Medicare overpaid Medicare Advantage plans to the tune of $13.9 billion compared to traditional Fee for Service Medicare patients.

Don Berwick, MD, previously the man in charge of CMS, stated in an article he wrote for the Journal of Health Affairs, June 8, 2022, “If an ice cream firm can offer ice cream for free because of a subsidy, its market share will of course grow against firms that charge for ice cream. The cause is not better ice cream; it is free ice cream.” His analogy explains the increased popularity of Medicare Advantage plans over Medigap plans. But it is not free: ultimately, as taxpayers, we are paying for this.

The excessive profit paid to the insurance industry via Medicare Advantage plans, $13.9 billion in 2021 alone, could go a long way towards improving benefits and reducing costs for all Medicare patients.

As you make your decision to choose Medigap supplemental insurance or a Medicare Advantage plan to supplement your Medicare Parts A and B, please keep the above information in mind.

Dwight Michael, M.D., a retired family physician, is a member of Gettysburg Democracy for America’s Healthcare Task Force