Competing for Medicare Advantage Customers - Why?

[MineralMan]

A couple of years ago, my Blue Cross PPO Medicare supplement was discontinued, due to a change in some law. I didn't like the alternative Blue Cross was offering, so I switched to an Aetna Advantage plan that was connected to my Allina healthcare system. That was fine, and cost me less than half what the Blue Cross plan had cost. I don't have any real health problems, so I see my doctor once a year for the annual Medicare wellness check and he prescribes a year's worth of prescriptions for me. With any luck, I'll be able to continue that.

Anyhow, I've written about those Advantage plans before. They get the Medicare Part B money that is deducted from your Social Security check every month. If you become ill, Medicare reimburses them the standard set amount for your care. You pay a small ($46/per month) premium and small co-pays for some services, with an annual out-of-pocket cap. There are preferred providers, preferred pharmacies, etc. Since i've been using the Allina system for many years, I'm fine with that. What I have found interesting, from the start is the low total cost to participants. Aetna gets the $140-something monthly part B that is deducted from my social security, plus my $46 premium. Less than $200 per month.

For that small amount of money, I find if fascinating that the providers of Advantage plans compete like crazy for my business. Every year, my mailbox is full of offers from multiple insurers wanting me to sign up. All of the plans are virtually identical, in terms of benefits, since what they offer is closely regulated. But, they want my business.

Yesterday, Aetna sent me a box, shipped by USPS. In it was a large assortment of healthcare supplies. Two pints of hand sanitizer, a digital thermometer, a box of BandAid cloth-based bandages, toothbrush, three tubes of toothpaste, skin lotion, a pill organizer and several other items I won't list here. No charge. Of course, we are almost at the time for open enrollment, so I suppose they are showing me that they hope I do nothing so my coverage will roll over to the same plan again next year. It will. But not because of their bribe box.

All of which makes me wonder about health insurance costs. I'm 75 years old, so I'm in a category of people who are far more likely to require expensive healthcare at some point. And yet, they're competing with each other to get that $200 total per month.

How strange!

[empedocles]

1. Plus their huge advertising mailing costs to get new customers. Can't believe the

amount of mail I get from the various 'advantage' companies - seems like they are cutting corners somewhere.

[MineralMan]

2. It's very interesting.

Apparently, they're making money. At the same time, my wife is paying almost $800/month for her health insurance. Fortunately, she turns 65 next year and will switch to Medicare.

[snowybirdie]

5. Shop

We're paying almost $10k a year with Medicare supplemental and drug care for two. Have the best plan, but it does go up every year.

[snowybirdie]

3. We looked into it

This year as our circumstances had changed. Decided to stay put on regular Medicare after hours of research. Main reasons were that your doc can leave your plan at any time and you lose him. Second, they can opt to not renew you if you're costing them too much. So if you're extremely sick, you just might have to scramble to get back on regular Medicare at that time. And many plans won't insure you without charging a high premium. As we age, we decided not to take that gamble. Good for younger and healthier folks though. Good luck!

[Freddie]

6. My daughter is a home care RN case manager

They HATE the Advantage plans because the bean-counters are always second-guessing length of treatments etc. and the nurses have to jump thru hoops. She said traditional Medicare does none of that.

[Grins]

9. YES!! HUGE drawback! They can overrule MD's and deny coverage

[enough]

11. Interesting perspective, thanks. We have been on an Advantage plan for years

with no bad experiences. But so far we haven’t had to use it much. I did have two knees replaced last year with no problems, but we haven’t yet dealt with anything complicated.

[Freddie]

4. I just turned 64

Already had 2 guys visit my house trying to sell me a Medicare plan. My 64th birthday was 3 weeks ago! I have plenty of time to research this plus I think I’m just going to stay on husbands work plan (he’s 2 years younger) til he retires at 65. Cost to us to cover me about the same as a supplement plus it’s great coverage, no deductible to stay in network and very low co-pays for rx and doc visits.

[Journeyman]

7. I, too, wonder the same thing . . .

I'm self-employed and became eligible for medicare last year. I went from paying over $1,000 a month for insurance, to less than $145 for better medical care. Plus all the benefits of an Advantage Plan (for example, once enrolled, I was eligible to join any or all of five gyms in my area for no cost whatsoever -- an annual savings of some $325 over my original gym membership, a tidy sum that pays for almost two months of Medicare per annum).

Like you, I don't understand how all this works.

For years, I've written letters to my Senators, Congresscritters, and Presidents, imploring them to extend Medicare to all. I offered to pay for the service, and not just the paltry $145 a month. I'd have gladly paid Medicare the $1,000+ I paid to Blue Shield each month in exchange for both decent medical care and the ability to help fund a program millions of seniors depend upon for coverage in their years of need. Obviously, I'd like to have gotten Medicare for All at a lower cost than my Blue Shield coverage, but if my hard-earned dollars had to go to insurance anyway, why not make it for a plan that serves people not investors.

[SWBTATTReg]

8. I love the Med. Advan. plan that I'm on, no unexpected fees or anything like that (a nice thing),

and you're right, I'm throwing away at least 5-10 a week from these people pushing their plans. I will have to keep an eye out for my box of Aetna supplies too, I never seen the likes of anything like that yet.

Thanks for the write up, I suspect that a lot of DUers will find your write up helpful, if they're new to this whole thing (healthcare when one starts drawing their social security (or getting close to it)). There are so many things out there, confusing to some I'm sure.

Perhaps the plans are completing for our medicare dollars because in turn, they can charge the government whatever price that they have for the services to get their reimbursement (I may be wrong here), for example, if I have a broken bone set in my leg and the total cost is $25,000, they in turn (the med. advantage plan) will add their costs and such onto the $25,000, thus in the end, will bill the government $40,000 ($25K + their markup = $40K).

[yardwork]

10. My mom is on an Aetna Advantage Plan.

It's more expensive than yours, but still relatively low cost compared to others. However, there are two important issues to consider. First, Aetna's managed care plan is very reluctant to approve rehab after hospital stays. In fact, they tried to kick my 84 year old mom out of the hospital while she was still very sick and weak, and they refused to approve the recommended stay in a rehab facility. Mom's very savvy team of docs had to fight and fight. Before it was finally approved, I had to take a certified check for $10k to a rehab facility to hold her spot. That's what a month of rehab would have cost, out of pocket.

Second, as others have mentioned, health systems leave the plan, and not all medications are approved.

I've kept mom on her plan but these are issues to consider.

[GeorgeGist]

12. You're analysis is missing something ...

I don't know what it is but these middlemen are making MONEY somehow.

[LiberalBrooke]

14. It is missing the largest source of money the insurance company gets.

[LiberalBrooke]

13. My understanding is that they get a set amount from the government each month to cover you.

That is where they profit if you do not need care. Their goal is to collect that money and your premiums and copays and pay out less. Their biggest source of funding is the government money paid to them to cover Medicare services. The patient basically signs their Medicare benefits over to that insurance company.

[notinkansas]

16. And I believe that insurance company can drop you or deny coverage

if you get seriously ill. The free gym membership becomes much less important in that situation. We decided to go with a Medigap policy.

[PoindexterOglethorpe]

19. No, according to what I read on line.

You cannot be dropped from and Advantage Plan unless unless you are enrolled in a Special Needs Plan (SNP) and no longer have the "special need".

I'm in an Advantage Plan that costs me nothing extra out of pocket, and since I'm very healthy, no prescription meds, it makes a lot of sense for me.

[notinkansas]

20. Alex Lawson is the Executive Director of Social Security Works.

This interview is extremely informative. Must watch.
https://medsuppnews.com/private-health-insurer-calls-itself-medicare-to-take-advantage-of-you-w-alex-lawson/

[LiberalBrooke]

21. They cannot drop you but they can and will

limit what care you get.

[ihas2stinkyfeet]

15. bcbs sent me a biden blue mask.

imma write 'rgb sent me' on it w sharpie and wear it to vote.

[rlegro]

17. I agree Advantage plans are questionable

Yes, you get some actual advantages in an Advantage plan, but as people above have pointed out those come with risks and requirements that include some of the worst aspects of plain old private health insurance. You also can get advantages by paying for a traditional Medicare private supplement plan, of which there are for many of us many flavors, but you don't give up portability and other features of standard Medicare. If you're mindful of your retirement dollars, and want to reduce your paperwork (maybe), an Advantage plan might make sense but there are gotchas waiting to get you.

I think the reason the private insurers pour so much marketing effort into Advantage plans is that these plans are good PR for them and good politics in their relations with elected officials who promote private insurance in general -- especially including the Bush-era Republicans who wrote the Advantage plan option into law. The private insurers get to add the public term "Medicare" to the title of their Advantage plans, but it's only Medicare in the narrow sense that public tax dollars flow to the private insurer who manages the Advantage plan. Yes, they have to follow certain Medicare minimum standards but Advantage plans diverge in an increasing number of ways. So in a sense Medicare dollars get sucked out of plain old Medicare itself. I'd say that's intentional as movement conservatism's usual slow-dance way of undermining the social safety net.

Note that the various Advantage providers compete both with one another and internally, because private insurers that offer Advantage plans also tend to offer standard Medicare supplement plans. Surely they'd like to collapse those choices into one grand Advantage "choice," but first they have to clear out the competition -- and Medicare itself while temporarily useful to their cash flow is one of those competitors! Advantage customers might save money in the short run (notwithstanding the risks mentioned above) but that's because Advantage plans are still in the realm of loss-leaders for the insurers while they try to hold on to their private business models in general and to more customers in particular.

In a rational model, there'd be no need for traditional Medicare supplement plans, much less Advantage plans, because basic Medicare coverage would be sufficient for the needs of every retiree. But the program has been forced to keep its basic offerings to a minimum. That was necessary in the early going when tens of millions of retirees hadn't yet come into the program, but now the minimums aren't consistent with modern health care and its sophisticated equipment, specialization, complex pharmacology and wider treatment methods. In a rational world, the U.S. would have a true national health service, period. Because adding layers of bureaucracy and replication of services is not efficient, but private models at any level make that inevitable.

It annoys me that Republicans enacted a law that tags on the very Madison Avenue "Advantage" modifier to original Medicare. These insurers get to associate themselves with the government health plan, promoting their alternative as better (it's Advantageous!) while twisting the sense of the citizenry as to what, exactly, Medicare is. Just because of the Advantage plan's existence, that understanding mutates. And that's not an accident, but a necessary step for those whose ultimate goal is to destroy Medicare. When, say, 70 or 80 percent of retirees get Advantage coverage, the cry will go up: Why not totally cut out that unnecessary middleman, namely Medicare? Just give us private health insurers the tax dollars directly and let us run our retirement coverage as we run everything else? It's a clever bit of political ju jitsu.

[MineralMan]

18. All of that is true, of course.

It's a judgment call. You choose a plan or type of Medicare add-on that fits your particular situation as you see it for the coming year. Then, open enrollment comes along at the end of the year, and you can rethink, if necessary.

I see this complex system as probably how universal healthcare is going to end up being configured. The insurance companies are going to lobby hard to keep money flowing to them, one way or another. If a system can be designed that gives consumers choices to make, while ensuring that the insurance companies still have a viable position, we're more likely to get a universal system, I think.

Basically, the Medicare supplemental insurance and Advantage plan options let the insurance companies play with the 20%, while Medicare pays the bulk of costs for major medical issues. That's why those programs are so popular with the insurance companies and why there is so much competition among them for subscribers to their plans.

I suspect that any universal health care system that ends up being implemented is going to work in a somewhat similar way. The bureaucracy is already in place for it, so the transition will be fairly smooth, I think. That's just how I see it, though, of course.