Medicare, Medicare Supplemental & Medicare Advantage: Part III - Who enrolls in what plan?

A 2005 report by Emory University researchers and commissioned by the Blue Cross Blue Shield Association of America found the following:

Of eligible retirees, 18% percent only have Medicare coverage. It is important to note that 49% of African-Americans and 31% of Hispanics and 33% of Whites fall into this category. Over 30% of retirees have primary or supplemental coverage through employer or union retirement plans. Another 25% of those who are Medicare eligible purchase MedSup (Medigap) policies on their own. Another 13% are Medicare beneficiaries who are also on Medicaid or other public assistance plans. Medicare Advantage covers 13% of retirees (Today, this represents 10 million people.)
Of retirees without employer/union plans or Medicaid, 53% of Hispanics, 40% of African- Americans and 33% of whites are enrolled in Medicare Advantage plans.

Medicare Advantage plans are required to offer at minimum the same benefits as traditional Medicare. Many offer more coverage, including vision, dental and drug benefits. As a result, those with lower incomes (<$20,000) are quick to see the value in joining such programs. In fact, 18% of Medicaid eligible retirees join a Medicare Advantage program instead of Medicaid. [One wonders if this is because of the challenges in signing up for public assistance or because Medicare Advantage is preferred.] It was determined that Medicare Advantage plans provided a $1,128 per person savings to the state and federal government over Medicaid. According to the study, if Medicare Advantage was ended, 39% would join a MedSup plan. Another 39% would be left with only basic Medicare and 22% would join Medicaid. As discussed in the October 29th post, Congress is subsidizing benefits for Medicare Advantage enrollees. Poor and minority groups are disproportionately affected if these are eliminated. Since Medicare Advantage is more cost-efficient than Medicaid and has a 90+% satisfaction rate, perhaps there ought to be some means testing to qualify for these private sector programs. From a cost standpoint, perhaps would it be reasonable for government to encourage elderly Medicaid enrollees, in geographic areas where plans exist, to enroll in Medicaid Advantage programs.

Medicare, Medicare Supplemental and Medicare Advantage: Part I

What’s the difference?

Traditional Medicare covers 80% of allowable medical expenses for the elderly. In general, it covers hospitalizations (Part A) for free for those over the age of 65 who are also eligible for social security. The elderly who want part B coverage, which covers things like doctor visits, labs, etc., must pay monthly premiums which are deducted from the social security checks. Since it does not cover all medical expenses, many enrollees also buy a Medicare Supplemental [MedSup or Medigap] policy. There are about a dozen MedSup plan options from which to choose. Plan benefits are government-defined, but privately-insured. There is no medical underwriting for the plans, and thus, no pre-existing conditions. While there may be a dollar or two discount per month for enrollees who buy coverage through a union, trade organization or AARP, there is no need to join such an organization as the plan prices are competitive.

Medicare Advantage, previously known as Medicare+Choice or Part C, is a different animal. It was established by the Balanced Budget Act of 1997. People with Medicare A and B can choose to receive their Medicare healthcare services through an Advantage plan. It is a cheaper alternative that negates the need for a MedSup plan, as it provides many of the same benefits without having to buy additional coverage, and may also provide Part D coverage. Enrollees agree to receive their care through the plan’s network of providers. “Medicare Advantage plans include (1) Medicare Managed Care plans (like HMOs), (2) Medicare Preferred Provider Organization plans (PPOs), (3) Private Fee-for-Service plans(PFFS), and (4) Medicare Specialty plans (available in some areas to provide Medicare benefits for certain people with special needs, such as beneficiaries in institutions).” [SSA website]. It was supposedly an attempt to privatize Medicare. But since there are no specific eligibility requirements for this lower cost program, it is not too surprising that this program is growing in popularity, particularly the PFFS plans. Of the 45 million Medicare recipients, 9 million are Medicare Advantage members.

Congress has Medicare Advantage, in particular, in its sites to cut costs. Tomorrow we will look at why.