Medicare, the nation’s health insurance program for disabled and elderly persons, turned 44 this week. The President and many Democrats want to make changes to the aging program as a part of health care reform. For instance, President Obama told the American Association of Retired Persons on July 28 that he wants to eliminate 177 billion in subsidies to the popular Medicare Advantage programs.
Although the President told the AARP, “nobody is talking about trying to change Medicare benefits,” many senior citizens are worried. And those who are enrolled in Medicare Advantage plans may have reason to worry. Although Mr. Obama considers Medicare Advantage an example of wasteful spending, the plans are popular with seniors because they offer benefits and care coordination which basic Medicare plans do not provide.
Some physicians and health plans are nervous as well.
For instance, this week, Dr. Mark Hoffing of Palm Springs, California, led a delegation of elderly patients to the capital for some citizen lobbying. They presented 10,000 signatures to legislators in an attempt to persuade them to leave Medicare Advantage plans intact.
Truly, Medicare Advantage plans are popular. According to John O’Brien, Assistant Professor of Clinical and Administrative Sciences, College of Notre Dame School of Pharmacy, the proposed cuts are “a step backward” and would undermine plans which seniors appreciate.
"Medicare Advantage plans are innovative health insurance products that have led the way in patient-centered care; 97 percent of MA enrollees are happy with the affordability and access their plan provides,” O’Brien explained.
According to a CBS News report, the President also told the AARP that reform “would put more focus on prevention and wellness efforts and incentivizing quality of care rather than quantity. That's what health care reform will mean to folks on Medicare."
Ironically, that is what Medicare Advantage plans are designed to do now. Basic Medicare covers outpatient, inpatient and some prescription costs, but there are significant gaps. Using federal funds, Medicare Advantage allows private insurers to manage the basic Medicare benefits plus provide additional services that Medicare does not cover, such as wellness services, dental care, hearing and vision screening. Most Medicare Advantage plans also provide prescription drug options which are often easier to use and understand than the basic Medicare, Part D coverage.
Speaking of Part D, the President promises that his reform plan will close the gaps in prescription coverage. However, he fails to note that Medicare Advantage plans frequently cover prescription drugs more fully than basic Medicare. It is difficult to understand how the current House backed plan will save 177 billion while at the same time erasing the gap in current basic drug coverage.
President Obama claims the subsidies paid to insurers are “waste” which can be cut. However, what this assessment misses is the fact that the need for health care covered by Medicare Advantage plans will not go away because the funding scheme is altered. Somebody has to pay. According to Andrea Zachar with Knepper Insurance in Somerset, Pennsylvania, Medicare Advantage plans provide an important option for Medicare beneficiaries.
“We are seeing people gravitating toward the Medicare Advantage because monthly costs are lower than purchasing a supplemental insurance plan along with straight Medicare,” Zachar said. “If Advantage plans go away, then some seniors may not access certain services because they cannot afford them,” she added.
This amounts to a cost shift from the government to senior citizens and the disabled. In practice, seniors who are now in Medicare Advantage plans may well see their benefits reduced if the funding structures are altered. The President is technically correct when he says, “nobody is talking about trying to change Medicare benefits,” if by that he means the basic Medicare benefit package. However, for people, often low income and rural residents, who rely on those additional services covered by Medicare Advantage, reductions in benefits or increases in premiums seem likely. The other possible outcome, which no one likes to talk about, is that seniors will simply avoid preventative care, doctor’s visits, and other needed services, thereby putting their health at risk.
There is some evidence that Medicare Advantage plans improve important aspects of patient care. According to a study reported this month by the Association of Health Insurance Plans, Medicare Advantage plans had lower hospital utilization rates and fewer hospital readmissions among groups of patients with heart disease and diabetes. Some preliminary data indicated better health status as well. Perhaps Medicare Advantage plans should be studied, not eliminated.
For sure, there are aspects of Medicare Advantage that need tweaking. “The bizarre thing about these plans is that the government does not pay insurers equally nationwide. Moneys are distributed by counties, based on previous year utilization.” Katalin Goencz, with MedBillsAssist told me. Ms. Goencz added that in many parts of the country, the plans are working well; elsewhere, not so much. When asked if she thought the Medicare Advantage should be cut, she said, the government “…should make some cuts to eliminate some of the poorly performing plans, but that is about all.”
Making those poorly performing plans either improve or get out of the Medicare market is a good idea. The President cannot raise benefits in basic Medicare and maintain his promise to cut spending and he cannot cut Medicare Advantage without low income seniors losing benefits, spending more or avoiding necessary care. As configured, the president’s plan for Medicare is not the change we need.