In my opinion, Medicare Advantage plans were never a smart purchase. That’s because many people don’t understand they are not a Medicare product. They are programs that are underwritten by private insurers. The claims are adjudicated by the private insurer as well. Upon purchasing a “Medicare Advantage” plan, the insured waives the right to have his or her claims paid by Medicare. Yes, the private insurers do have to follow all of the rules of Medicare. But, the private insurers can offer different plan designs, including different deductibles and out of pocket limits that are the insured’s responsibility.
I worked in the health insurance business as both a broker and company representative selling group health insurance to medium and large size corporations. I remember the company underwriters would cringe when they saw a group submission that contained more than 20% retirees on the census. Elderly people tend to be sicker and submit more claims than younger folks, so a large proportion of retirees on a census sent out signals that the case wouldn’t be profitable. So what was the solution? Many companies removed the seniors from the group plan and purchased Medicare supplements for them and their spouses. I saw many major corporations buy Medicare Advantage plans for the retirees due to the cost savings offered by the plans at that time. Today, so many companies have discontinued covering retirees that any coverage is a gift.
I have been watching the trends in the private insurance sector (non-Medicare markets). Many people have obtained health insurance via the Obamacare exchanges. However, they are finding that the networks of hospitals and doctors can be quite limited. Some of the bigger hospitals aren’t included, and many doctors are refusing to take the coverage from patients. (The silver and bronze plans offer much narrower networks in order to keep prices lower). On the one hand, I suppose if someone is a new enrollee and doesn’t have a relationship with a doctor or prefer a certain hospital, it may not matter. On the other hand, other enrollees have reported they have had a tough time obtaining the list of providers from the exchange. Then, they made the mistake of purchasing a plan without checking the list of providers, and found out the desired provider wasn’t on the list.
The trends are also beginning to infiltrate the Medicare Advantage market. According to a CBS news article, “The health care reform law reduced payments to providers participating in Medicare Advantage plans, and though the law’s proponents have said the reform would save money while rewarding providers for enhancing the quality of their care, foes have pointed to stories of people losing access to their doctors due to the law’s regulations.” In addition to the reported shrinkage in networks, the costs of the Medicare Advantage Plans are increasing. Click here to read the entire article.
At this point, my next adventure will be to log on to the exchange and make note of the various networks offered by the various plans. Then, I am going to compare what’s offered in the Medicare Advantage market. Approximately 15 years ago, I recall one of the major insurers in the Chicago metro area quoting dirt cheap prices in the Chicago market. After the rock bottom prices were introduced, a major announcement was made that the carrier was terminating its contracts with several major hospitals. There was plenty of havoc in the market and I am hoping this isn’t a foreshadowing of what is to come.
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