A new report finds that there may not be much advantage after all in Medicare Advantage plans over traditional Medicare, at least for certain seniors. The managed-care plans offered by private insurers are touted for offering extra benefits—vision, hearing, and dental coverage, for example—despite having lower premiums and out-of-pocket costs. What's not to like? Some 9 million seniors, about a fifth of all Medicare beneficiaries, have signed up. But last week the Government Accountability Office announced that seniors in some plans might actually pay more for certain services.
Unfortunately, the seniors likely to be hardest hit are the sick. According to the report, 19 percent of seniors in Medicare Advantage plans were projected to face higher out-of-pocket costs for home health services than under traditional Medicare in 2007, while 16 percent faced higher costs for inpatient hospitalization services. Nine percent were projected to pay more for care in a skilled nursing facility.
The report also found that 52 percent of Medicare Advantage plans didn't have an annual out-of-pocket maximum to cap beneficiaries' spending. And the out-of-pocket maximum, if it did exist, often didn't apply to many products and services, such as certain cancer and other drugs covered under traditional Medicare Part B (40 percent of beneficiaries were in plans with this exclusion), outpatient substance abuse counseling (24 percent of beneficiaries), and treatment by physician specialists (23 percent).
The program is a political football. Though it was originally envisioned as a potential way to save the Medicare program money, the government pays on average 13 percent more to care for a Medicare Advantage enrollee than it would if that person were in traditional Medicare. This report only fans the flames of critics who maintain that the government is getting little bang for its buck. "Overpayments fatten company profits, even as many seniors face higher costs in MA plans than they would in traditional Medicare," said Rep. Pete Stark (D-Calif.), chairman of the House Ways and Means Subcommittee on Health, in a press statement following the report's release.
It's unlikely that seniors, whatever sort of Medicare plan they're enrolled in, will need many of the services described by the GAO report in any given year. About 1 in 5 Medicare beneficiaries was admitted to the hospital in 2002, according to the Kaiser Family Foundation. Only 6 percent had a home health visit; even fewer—4 percent—visited a skilled nursing facility. Depending on the fine print of a plan, a Medicare Advantage plan may be a good option, say experts. But it's important to think ahead. When researching Medicare plans, people tend to focus on what their needs are at that point rather than on what the plan will cover if they have a stroke or break a hip, says Tricia Neuman, director of the Medicare Policy Project at Kaiser. That kind of thinking can be hazardous to your wallet and your health.