paul’s words

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You’ve seen advertisements and received junk-mail flyers for “free” Medicare coverage. It’s Medicare Part C (“Medicare Advantage”). It is “free” to the patient. It’s a major reason Medicare is running out of money: the “insurers” are paid more than the actual cost of the average patient’s health-care. Medicare pays more to third-party administrators for patients than if Medicare pays directly! It is welfare, an “advantage”, for Humana, Blue Cross, United Health Care, Sterling, and all the other insurance companies: they are guaranteed a profit; those insurers take no risk. It isn’t insurance, it's a pass-through payment that provides to the corporations a cut along the way.

Is it sensible for Medicare to pay more for a patient than it costs Medicare if it pays directly?

Here’s how the Medicare Advantage Plan (Part C) is described in Medicare & You 2008 (“...the official government handbook...” that Medicare enrollees received at the end of October, 2007):

“A type of Medicare health plan offered by a private company that contracts with Medicare to provide you with all your Medicare Part A and Part B benefits. ... If you are enrolled in a Medicare Advantage Plan, Medicare services are covered through the plan, and aren’t paid for under the Original Medicare Plan. Most Medicare Advantage Plans offer prescription drug coverage.” (see page 101)

These are three types of Part C Medicare Advantage Plans (also at page 101):

1. Medicare Health Maintenance Organization (HMO): “you can go only to doctors, specialists, or hospitals on the plan’s list except in an emergency”;
2. Medicare Preferred Provider Organization (PPO): “you pay less if you use doctors, hospitals, and providers that belong to the network. You can use doctors, hospitals, and providers outside the network for an additional cost”;
3. Medicare Private-Fee-for-Service (PFFS): “you may go to any Medicare-approved doctor or hospital that accepts the plan’s payment. The insurance plan, rather than the Medicare Program, decides how much it will pay and what you pay... . You may pay more...for Medicare-covered benefits.” (I added all the underlining.)

If you can find a Part C Medicare Advantage Plan that includes your doctors, here’s how it works: You pay the regular Part B premium ($96.40 per month for 2008) but you can drop your medigap policy (Medicare Supplemental Insurance) and you can drop your prescription drug insurance (under Part D), so you save money on premiums. You pay nothing to the “insurer” - its costs are more than covered by the excess amount Medicare pays to it. The “Plan” pays for the services that Medicare currently pays, except you pay small out-of-pocket fees - “co-payments” for doctor office visits, around $10 for a primary-care physician and $50 for a specialist on referral from the gate-keeping primary physician (that’s for “in-the-plan” physicians).

$50, or even $10, isn’t “small” to everyone. Your government pays those insurers to charge you - if you can afford to see your doctor.

W. Paul Wharton