Medicare Advantage is terrific – just don’t get sick!
I’ve been asked to submit a blog about my personal point of view about Medicare Part C (so-called “Medicare Advantage”) versus “traditional” Medicare.
It’s my strong, personally held belief that insurance should help us manage risk and, when the insured event occurs, the insurance should pay the benefit! When you have an accident with your car, the insurance should pay, right? It sounds simple, but too often insurance companies or their agents (a.k.a. brokers) make health insurance choices far more complicated in order to increase profits. It’s been my privilege to work all over the world, so I have seen health insurance markets in many countries. Without a doubt, the most complicated market is the United States’ health insurance market, therefore it’s no surprise that it’s difficult to simplify. The inventory of terms looks like an encyclopedia!
The Medicare program has been operated efficiently and effectively by the federal government since 1965, and private insurance companies wanted access to this growing market. In 1997, Medicare Part C was added as a concession to the insurance lobby of large, for-profit insurance companies. In order to attract consumers, the companies selling Part C plans offered zero dollar, or very low monthly premiums, and added benefits and services not covered by traditional Medicare such as gym memberships, vision and hearing benefits, and others. In the retail business, we would call these “loss leaders.” If you are enrolled in a Medicare Part C plan, and you never get sick, you have a good deal!
The fly in the ointment for those with Medicare Part C, is that when you get sick, there are out-of-network restrictions (which doctors or hospitals you can access), co-pays, deductibles, and coinsurance (“out-of-pocket costs”), which Part C plans require and which can reach $10,000 per year. Also, there are heavier prior authorization requirements in most Part C plans than in traditional Medicare. These prior authorization restrictions have become so prohibitive for beneficiaries, so burdensome for doctors and hospitals, that the insurance companies have been scrutinized by state and federal governments, and several CEOs have been called before Congress to explain. (The Congressional equivalent of being called to the Principal’s office in school.)
If you get sick, your “Medicare Advantage” could turn into a very serious financial disadvantage.
Irving Stackpole is President of Stackpole & Associates, Inc., a strategy, marketing and research firm that works extensively with, among others, those in aging services, long-term care, health tourism, and medical travel.