By Marilyn Moon, Ph.D. – Center for Medicare Advocacy Visiting Scholar, Medicare Analyst, Former Public Trustee of Medicare and Social Security
Sadly, one of the myths about Medicare Advantage (MA) is that it is better for minorities and persons with low incomes than traditional Medicare because its lower premiums and more comprehensive coverage “solve” the problem of access to care for these beneficiaries. That belief absolves policy makers of the responsibility of improving the traditional Medicare program on the grounds that people can simply join Medicare Advantage. It sounds like a good deal to many who hear the constant pitches in the media about the givebacks and extra benefits. But it ignores the potential serious downsides for people when they actually face serious illness and need comprehensive care. We have, in Medicare, created a serious dichotomy in the program that still leaves many—particularly the most vulnerable –at risk, while offering windfalls to others.
To be sure, there are fine Medicare Advantage plans that serve their clients well and have a satisfied constituency. But for too many, that satisfaction lasts only as long as they are healthy and using little or no care. Fortunately, that represents a large number of Medicare Advantage enrollees since many seniors and persons with disabilities do not need a lot of care in any year (and are the most likely to be initially attracted to MA plans). But that ignores what should be a key feature of a universal public program like Medicare: to protect the most vulnerable among us even if they do not make up a majority of beneficiaries.
What is the harm in allowing Medicare Advantage to gradually take over the program as is currently being projected? Let me count the ways.
First, oversight of the program is very lax and there are few protections, for example for people denied care or diverted to inferior sites of care (which, as highlighted by a recent Office of Inspector General Report, occurs far too often). That might not have mattered as much when MA was a small share of the total program and options for staying in traditional Medicare were made clear to people. But as MA has grown in strength and size, oversight has not increased; in fact, in many ways, including marketing, it has diminished. Even basic information such as what services have been denied is not collected. This will likely only get worse as MA plans become “too big to fail,” reminiscent of financial institutions that got away with abuses during the 2009 financial crisis.
Second, Medicare for a variety of reasons substantially overpays MA plans, widening the gap between MA and traditional Medicare in terms of costs and services provided. Extra benefits in MA are possible because of this overpayment, while those remaining in traditional Medicare pay higher Part B premiums. Policy makers are reluctant to improve benefits in traditional Medicare because of the program’s high overall costs – costs that in part are a result of overpaying MA. For example, MA plans are required to offer out-of-pocket limits on cost sharing but those in traditional Medicare are not given the same protections.
Third, problems for beneficiaries in MA arise when they become ill—not the best time to have to stand up to your insurer. Many MA plans have inferior networks for services like skilled nursing care and home health (which after all are for the less desirable “sick” beneficiaries). Some also steer their patients to more affordable places for treatment. This is probably fine for common problems, but when a serious illness arises (such as a hard-to treat or rare cancer), all of us would like to access providers who have a strong track record, not the lowest bidder for the treatment.
Fourth, the remedy of simply disenrolling in an MA plan and returning to traditional Medicare is easier said than done. In most states, beneficiaries returning to traditional Medicare will not qualify to enroll in the supplemental insurance (Medigap) plans that help defray Medicare’s high out-of-pocket costs. Just when you are in need of a lot of care, why should you be forced to do without the protection you need? This problem of ease of movement between MA and traditional Medicare could be fixed at the federal level but it is another area where policy makers have put their heads in the sand and ignored the issue.
Medicare Advantage is essentially good for Medicare Advantage plans but too often not for beneficiaries. Why else would we be bombarded endlessly by Joe Namath and Jimmie Walker to sign up for these wonderful plans? They are certainly making enough money to dominate the airwaves with their commercials—which never mention, for example, that you can only use their hospitals or doctors unless you pay out-of-pocket yourself. And the pandemic has exacerbated this issue. All of us are seeing health providers less to avoid being exposed to COVID. This shows up in lower spending on behalf of those in traditional Medicare, but MA plans continue to get the same overly generous monthly payments even when their enrollees are not accessing their services. And, in fact, payments to MA plans are rising next year.
Celebrating MA plans as the “solution” to Medicare’s challenges at best is a misplaced endorsement and at worst is undermining the program by unnecessarily raising costs while putting the most vulnerable citizens at risk. How can we possibly imagine that this is good policy for Medicare solvency or our seniors and persons with disabilities?