From John Curry, September 9, 2009
HEALTH CARE FACT CHECK: Medicare Advantage not all that advantageous for seniors, government
Cleveland Plain Dealer, September 9, 2009
Q: I am a senior on Medicare Advantage and I like my plan, which covers some services not provided by traditional Medicare. But President Obama has said that he will eliminate Medicare Advantage to pay for his health care overhaul, which means I must go to a new plan. Does that mean I will have to pay the 20 percent co-payment that traditional Medicare now requires, or else have to buy a gap coverage to cover that 20 percent, at a cost of $150 to $250 a month? How is this fair?
A: This is an important question for seniors, containing truths, myths and a bit of political baggage. It also underlies an overlooked point: Senior citizens get a good deal from Medicare. Workers pay taxes into the basic hospitalization program and then, when they retire, they see about $96 a month deducted from their Social Security to pay for doctor's visits and outpatient care.
The average senior gets far more in benefits out of this government program than he or she ever pays in. Someone retiring in 2008 would have paid, on average, $30,650 in Medicare taxes during his or her working years, yet will receive on average $85,360 in hospitalization benefits, if male, or $81,570 if female, according to actuaries at the federal Centers for Medicare and Medicaid Services.
Still, Medicare requires a 20 percent co-payment for outpatient services, and additional co-payments for hospital stays exceeding 60 days. Some seniors simply pay this or work out arrangements with their doctors, while others buy supplemental policies to cover the gap -- and still others turn to Medicare Advantage for all their medical needs.
Medicare Advantage allows seniors to enroll in private health plans, usually through insurers or health maintenance organizations, as an alternative to traditional fee-for-service Medicare. Advantage plans were supposed to operate more efficiently and curtail the explosive growth of Medicare spending because, the thinking went, the private sector could do anything better than federal bureaucrats, and for less money.
For many seniors, this was a great deal, enabling them to avoid the co-payments or gap-coverage policies that many traditional Medicare beneficiaries buy. Some Advantage programs even throw in vision and hearing coverage, though the reader who asked today's question said he does not have those benefits.
About 23 percent of seniors nationwide, and 25 percent in Ohio, are in Advantage plans.
For the government, Advantage plans have not lived up to expectations. Advantage insurers charge the government more money, not less, requiring a taxpayer subsidy that averages 14 percent more per-patient on top of what traditional Medicare pays providers. That's an extra $1,138 per Advantage enrollee nationwide, or $1,166 for those in Ohio, according to a George Washington University analysis.
Medicare Advantage plans also tend to limit the doctors that seniors can see, just as traditional insurers do.
The U.S. Government Accountability Office has noted that many Advantage seniors wind up paying high co-payments when hospitalized, although the reader who asked today's question -- a retired certified public accountant -- said he does not face those kinds of fees under his Advantage plan.