The Medicare Advantage trap: What they don't tell you - Raw Story
Category: News & Politics
Via: cb • 2 days ago • 26 commentsBy: Thom Hartmann (Raw Story - Celebrating Years of Independent Journalism)
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S E E D E D C O N T E N T
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. . . [I]f you got suckered in by those omnipresent ads for Medicare Advantage and left regular Medicare for the siren song of cheaper coverage, "free" vision, hearing, or dental, or even "free" money to buy groceries or rides to the doc.
The open enrollment period for real Medicare closes at the end of the day Saturday, December 7th; after that, you're locked into the Medicare Advantage plan you may have bought until next year.
If you've had Medicare Advantage for a year or more, however, the open enrollment period is still "open" until December 7th, but you will want to make sure you can get a "Medigap" plan that fills in the 20% that real Medicare doesn't cover.
Companies are required to write a Medigap policy for you at a reasonable price when you turn 65, no matter how sick you are or what preexisting conditions you may have, but if you've been "off Medicare" by being on Medicare Advantage for more than a year, they don't have to write you a policy, so double-check that and sign up for a Medigap policy before making the switch back to real Medicare.
So, what's this all about and why is it so complicated?
When George W. Bush and congressional Republicans (and a handful of bought-off Democrats) created Medicare Advantage in 2003, it was the fulfillment of half of Bush's goal of privatizing Social Security and Medicare, dating all the way back to his unsuccessful run for Congress in 1978 and a main theme of his second term in office.
Medicare Advantage is not Medicare. These plans are private health insurance provided by private corporations, who are then reimbursed at a fixed rate by the Medicare trust fund regardless of how much their customers use their insurance. Thus, the more they can screw their customers and us taxpayers by withholding healthcare payments, the more money they make.
With real Medicare, if your doctor says you need a test, procedure, scan, or any other medical intervention you simply get it done and real Medicare pays the bill. No muss, no fuss, no permission needed. Real Medicare always pays, and if they think something's not kosher, they follow up after the payment's been made so as not to slow down the delivery of your healthcare.
With Medicare Advantage, however, you're subject to "pre-clearance," meaning that the insurance company inserts itself between you and your doctor: You can't get the medical help you need until or unless the insurance company pre-clears you for payment.
These companies thus make much of their billions in profit by routinely denying claims — 1.5 million, or 18 percent of all claims, were turned down in one year alone — leaving Advantage policy holders with the horrible choice of not getting the tests or procedures they need or paying for them out-of-pocket.
Given this, you'd think that most people would stay as far away from these private Medicare Advantage plans as they could. But Congress also authorized these plans to compete unfairly with real Medicare by offering things real Medicare can't (yet). These include free or discounted dental, hearing, eyeglasses, gym memberships, groceries, rides to the doctor, and even cash rebates.
You and I pay for those freebies, but that's only half of the horror story.
This year, as Matthew Cunningham-Cook pointed out in Wendell Potter's brilliant Health Care un-covered Substack newsletter, we're ponying up an additional $64 billion to give to these private insurance companies to "reimburse" them for the freebies they relentlessly advertise on television, online, and in print.
And here's the most obscene part of the whole thing: the companies won't tell the government (us!) how much of that $64 billion they've actually spent. They just take the money and say, "Thank you very much." And then, presumably, throw a few extra million into the pockets of each of their already obscenely-well-paid senior executives.
For example, the former CEO of the nation's largest Medicare Advantage provider, UnitedHealth, walked away with over a billion dollars in total compensation. With a "B." One guy. His successor made off with over a half-billion dollars in pay and stock.
Good work if you can get it: all you need do is buy off a hundred or so members of Congress, courtesy of Clarence Thomas' billionaire-funded tie-breaking vote on Citizens United , and threaten the rest of Congress with massive advertising campaigns for their opponents if they try to stop you.
And while the companies refuse to tell us how much of the $64 billion that we're throwing at them this year to offer "free" dental, etc. is actually used, what we do know is that most of that money is not going to pay for the freebies they advertise. As Cunningham-Cook noted, in one study only 11 percent of Advantage policyholders who'd signed up with plans offering dental care used that benefit.
Another study showed over-the-counter-drug freebies were used only a third of the time, leaving $5 billion in the insurance companies money bins just for that "reimbursable" goodie. A later study found that at least a quarter of all Advantage policyholders failed to use any of the freebies they'd been offered when they signed up.
That's an enormous amount of what the industry calls "breakage"; benefits offered and paid for by the government but not used. Billions of dollars left over every month. And, used or not, you and I sure paid for them.
In my book The Hidden History of American Healthcare: Why Sickness Bankrupts You and Makes Others Insanely Rich , I lay out the story of this scam and how badly so many American seniors — and all American taxpayers, regardless of age — get ripped off by it.
And now it looks like things are about to get a whole lot worse.
When he was president last time, Donald Trump substantially expanded Medicare Advantage, calling real Medicare "socialism." Project 2025 and candidate Trump both promised to end real Medicare "immediately" if Trump was re-elected; at the very least, they'll make Medicare Advantage the "default" program people are steered into when they turn 65 and sign up for Medicare.
These giant insurance companies ripped off us taxpayers last year to the tune of an estimated $140 billion over and above what it would've cost us if people had simply been on real Medicare, according to a report from Physicians for a National Health Program (PNHP) .
If there was no Medicare Advantage scam bleeding off all that cash to pay for executives' private jets, real Medicare could be expanded to cover dental, vision, and hearing and even end the need for Medigap plans.
But for now, the privatization gravy train continues to roll along. The insurance giants use some of that money to buy legislators, and some of it for expensive advertising to dupe seniors into joining their programs. The company (Benefytt) that hired Joe Namath to pitch Medicare Advantage, for example, was recently hit with huge fines by the Federal Trade Commission for deceptive advertising.
The FTC news release laid it out:
"Benefytt pocketed millions selling sham insurance to seniors and other consumers looking for health coverage," said Samuel Levine, Director of the FTC's Bureau of Consumer Protection. "The company is being ordered to pay $100 million, and we're holding its executives accountable for this fraud."
And what was it that the Federal Trade Commission called "sham insurance"? Medicare Advantage . Nonetheless, the Centers for Medicare Services continues to let Benefytt and Namath market these products: welcome to the power of organized money.
And it's huge organized money. Medicare Advantage plans are massive cash cows for the companies that run them. As Cigna prepares for a merger, for example, they're being forced to sell off their Medicare Advantage division: it's scheduled to go for $3.7 billion. Nobody pays that kind of money unless they expect enormous returns.
And how do they make those billions?
Most Medicare Advantage companies regularly do everything they can to intimidate you into paying yourself out-of-pocket. Often, they simply refuse payment and wait for you to file a complaint against them; for people seriously ill the cumbersome "appeals" process is often more than they can handle so they just write a check, pull out a credit card, or end up deeply in debt in their golden years.
As a result, hospitals and doctor groups across the nation are beginning to refuse to take Medicare Advantage patients. And in rural areas many hospitals are simply going out of business because Medicare advantage providers refuse to pay their bills.
California-based Scripps Health, for example, cares for around 30,000 people on Medicare Advantage and recently notified all of them that Scripps will no longer offer medical services to them unless they pay out-of-pocket or revert back to real Medicare.
They made this decision because over $75 million worth of services and procedures their physicians had recommended to their patients were turned down by Medicare Advantage insurance companies. In many cases, Scripps had already provided the care and is now stuck with the bills that the Advantage companies refuse to pay.
Scripps CEO Chris Van Gorder told MedPage Today :
"We are a patient care organization and not a patient denial organization and, in many ways, the model of managed care has always been about denying or delaying care - at least economically. That is why denials, [prior] authorizations and administrative processes have become a very big issue for physicians and hospitals..."
Similarly, the Mayo Clinic has warned its customers in Florida and Arizona that they won't accept Medicare Advantage any more, either. Increasing numbers of physician groups and hospitals are simply over being ripped off by Advantage insurance companies.
Traditional Medicare has been serving Americans well since 1965: it's one of the most efficient single-payer systems to fund healthcare that's ever been devised. But nobody was making a buck off it, so nobody could share those profits with greedy politicians. Enter Medicare Advantage, courtesy of George W. Bush and the GOP.
While several bills have been offered in Congress to do something about this — including Mark Pocan's and Ro Khanna's Save Medicare Act that would end these companies' ability to use the word "Medicare" in their policy names and advertising — the amounts of money sloshing around DC in the healthcare space now are almost unfathomable.
So far this year, according to opensecrets.org, the insurance industry has spent $117,305,895 showering gifts and persuasion on our federal lawmakers to keep their obscene profits flowing.
It's all one more example of how five corrupt Republicans on the US Supreme Court legalizing political bribery with Citizens United have screwed average Americans and made a handful of industry executives and investors fabulously rich.
They get away with it because when people choose to sign up for Medicare Advantage at 65 (or convert to these plans in their 60s or early 70s) they're typically not sick — and thus cost the insurance companies little.
Tragically, the people signing up for these plans have no idea about all the hassles, hoops, and troubles they might have to jump through when they do get sick, have an accident, or otherwise need medical assistance.
And since the last three years of life are typically the most expensive years for healthcare, the insurance denials are more likely to happen then — long after the person's signed up with the Advantage company and it's too late to go back to real Medicare.
This is why it typically takes a few years for people to figure out how badly they got screwed by not going with regular Medicare but, instead, putting themselves in the hands of private insurance companies.
The New York Times did an expose of the problem in an article titled "Medicare Advantage Plans Often Deny Needed Care, Federal Report Finds." It tells the story of "Kurt Pauker, an 87-year-old Holocaust survivor in Indianapolis" who'd bought an Advantage policy from Humana:
"In spite of recommendations from Mr. Pauker's doctors, his family said, Humana has repeatedly denied authorization for inpatient rehabilitation after hospitalization, saying at times he was too healthy and at times too ill to benefit."
This is not at all uncommon, the Times notes:
"Tens of millions of denials are issued each year for both authorization and reimbursements, and audits of the private insurers show evidence of 'widespread and persistent problems related to inappropriate denials of services and payment,' the investigators found."
If you have "real" Medicare with a heavily regulated Medigap policy to cover the 20% Medicare doesn't, you never have to worry.
Your bills get paid, you can use any doctor or hospital in the country who takes Medicare, and neither Medicare nor your Medigap provider will ever try to collect from you or force you to pay for what you thought was covered.
Neither you nor your doctor will ever have to do the "pre-authorization" dance with real Medicare: those terrible experiences dealing with for-profit insurance companies are part of the past.
But if you have Medicare Advantage — which is not Medicare, but private health insurance — you're on your own.
As the Times laid out:
"About 18 percent of [Advantage] payments were denied despite meeting Medicare coverage rules, an estimated 1.5 million payments for all of 2019. In some cases, plans ignored prior authorizations or other documentation necessary to support the payment. These denials may delay or even prevent a Medicare Advantage beneficiary from getting needed care…"
Buying a Medicare Advantage policy is a leap in the dark, and the federal government is not there to catch you. And it's all perfectly legal, thanks to Bush's 2003 law, so your state insurance commissioner usually can't or won't help.
Thus, here we are, handing billions of dollars a month to insurance industry executives so they can buy new Swiss chalets, private jets, and luxury yachts. And so they can compete — unfairly — with Medicare itself, driving LBJ's most proud achievement into debt and crisis.
Enough is enough. Let your members of Congress know it's beyond time to fix the Court and Medicare, so scams like Medicare Advantage can no longer rip off America's seniors while making industry executives richer than Midas.
And if you got hooked into switching out of real Medicare and now find yourself in a Medicare Advantage plan, you have three days to back out and return to real Medicare. For more information, you can also contact the nonprofit and real-Medicare-supporting Medicare Rights Center at 800-333-4114.
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Medicare Advantage is not Medicare. These plans are private health insurance provided by private corporations, who are then reimbursed at a fixed rate by the Medicare trust fund regardless of how much their customers use their insurance. Thus, the more they can screw their customers and us taxpayers by withholding healthcare payments, the more money they make.
~ from the article above.
Well let's start here:
Technically it is. It's "Medicare Part C". Yes, it's administered by private insurers, but so are parts A, B and D. The difference is that on parts C and D, you get to pick the insurance company. On A & B they're government contractors.
Then let's go here:
This one really stabs this guy's credibility in the back. Medicare Advantage plans are subject to the minimum loss ratio rules of the Affordable Care Act. They are required by law to pay out at least 85% of the money they recieve in claims and benefits.
This one is almost funny:
Government figures indicate that Medicare blows about 10% of total expenditures on fraud and waste. That they know about. Other estimates are as high as 25%. That's not to say Medicare is terrible, but let's not get carried away calling the US Govt "efficient".
They are very tightly regulated and the fines are generally much more than your claim.
Meh... Not so much. It's not like they cover everything. With Medicare A&B, the doctor knows ahead of time what Medicare will and won't cover They don't bitch as much because they know what to expect. But they have to get pre-authorization with all their commercial insurance patients, so it's not like they don't know how.
This happens all the time with all network based plans. Providers are always going on and off of healthplan networks, Medicare Advantage or no.
But that is the big advantage to traditional Medicare or "Medicare Fee For Service", which has the unhappy acronym of FFS. FFS doesn't really have a network, but the benefits are limited and it's not cheap. Advantage plans can offer richer benefits with the cost savings they get from deeper network discounts.
Lots of them are also available for free, while Medicare FFS is not. Medicare Part A is paid for by the taxpayers, so that doesn't cost anything to the insured. But Part B will set you back $185/mo in 2025, assuming you have a normal level income. If you've done really well and your retirement income is high, that can go over $600. Then most people buy a Medicare Supplement plan for $125-$150 (age 65) and a Medicare Part D drug plan (anywhere from $0 to $100 or so)
So by the time you add it all up, you're looking at around $350/mo. You'll usually find some Medicare Advantage plans for $0 premium. If you're on a tight income, that matters a lot.
Interesting. I appreciate the feedback.
If you don't mind, share your thoughts on this statement: (I am yet informing myself about it.)
As I said, they're classified as Medicare Part C, and they're subject to the MLR. So what he says here is 98% mistaken.
The process is called "pre-authorization", and it's standard for every insurance plan administered by a private insurer.
And there are lots of things Medicare doesn't cover that people have to pay for. That's well known by anyone who has ever cared for an aging loved one.
These companies make their money by administering huge volumes of claims, just like the private contractors that pay Medicare FFS claims.
The author is clearly angry. I don't know if that's personal or if it's just a political rant. But he's guessing at much of what he says, and he's just got a lot of the information wrong.
The pros of MA plans are lower premiums and additional benefits like dental, vision, gym memberships, hearing aids, etc.
The cons are small networks, limited coverage outside your service area, and smaller drug formularies.
If you can afford it, go traditional Medicare. If not, MA plans may make sense.
Having been on Medicare and Medicare Advantage since 2005 there is a lot that was left out of this article, The first thing under regular in which you have to purchase a supplement to cover the 20% Medicare doesn’t pay is that the insurance companies that provide that coverage and and will turn you down or drop you. Also after 65 the cost increase with your age. I the cost for Medicare and than for the 20% coverage and RX the best rate that I could get because of my age was $398 per month. You are priced out of the market as you age which a hell of a lot of people are finding out. Both my wife and I switched to Advantage plans around 5 years ago and have had no problems at all. First find an Advantage plan that is with a large company that has an extensive network or doctors/hospitals. Our advantage company does and my wife went through extensive cancer treatment two years ago and they provided and paid for well over two hundred thousand dollars worth or surgeries and kemo treatments. In the last year I have had two surgeries and hours and hours of PT and OT and again no problems all was covered and I have experienced no hassles. Both Moffett cancer center are in network and it’s one of the top cancer centers in the US and University of Florida Health again rated right at the top is in network for us.
Take a long look at both before making a decision.
That's great news and EXCELLENT feedback! It is in the vein of what I wish to inform me (and others) about this program. The author of this opinion piece is a serious, deeply-respected writer (and opine-r on issues of the day). Therefore, I value his opinion. That said, it is good to hear that not everyone is being taken for a ride. . . even though the corporations have high potential to maximize their revenue stream from 'services left on the card' by participants.
There's a flip side to this of course. Advantage plans are managed healthcare which puts the insurance companies between you and your doctor. It is incumbant on the customer to know what their plan covers and what it doesn't (or at least get pre-approvals for all tests, etc).
Last October there was a flurry of news articles about how insurance companies were going to change and/or drop advantage plans as they were not as profitable as planned for.
As a result, there have been some advantage plans that have been dropped and some providers that will no longer accept Medicare Advantage patients.
It's very easy to switch from traditional Medicare to an Advantage plan but not so easy to switch back to the traditional Medicare. Once you've been on an Advantage plan, you may not be able to find anyone who is willing to underwrite a supplemental plan to allow you to cover the 20% that Medicare does not cover. This can be a much larger issue as one grows older, our medical costs increase as we age.
Thank you for sharing. Now we have to wait and see what the incoming administration will do about Medicare advantage as it is. It is likely a program it supports wholeheartedly because of its privatization model over and against Medicare proper.
With ‘’traditional medicare and the supplement’’ you can be dropped or not qualify based on health history, that does not happen with Medicare Advantage. As one ages the supplement with traditional medicare goes up in price. When I hit 80 mine was $398 per month that was when I swtched to the advantage plan. Our Advantage plan is in all states and have had no problem accessing it when we are travelling out of state.
I'm not a fan of Medicare Advantage plans, but they do have a place.
There are some factual errors in the article, BTW.
Do inform/list them with an explanation. It can help 'us' all understand what/where/when/how accordingly.
BTW, I think the biggest shocker for me in this article is learning that Medicare Advantage is not Medicare, but private insurance. As for the information those companies don't bother to enlighten the public about in their financial arrangements with the government. . . I 'knew' something was up. . . but I did not know prior to this article why the 'buying and selling' aspect was so fierce. There is a high profit margin!
Somehow I replied to you in 1.1. Sorry about the confusion.
I have had Medicare Advantage by United Healthcare for many years now. I am quite happy with it for several reasons.
I have been in the same network with the same provider for ~25 years now. He recently went to another group but is still in the same network. Office visits are $0, specialists in network were $25, next year went up to $35. Monthly premium was $42, went to $50 for 2025. Starting last year referrals are not required.
My plan has Part D, and maintenance drugs for $0 for a 90-day supply. Any meds I need right away I pick up at King Soopers (Kroger). When I was in the hospital eight days with Covid in November of 2020 the bill came close to $100,000. My only cost was $90 for the ER visit. This year the ER visit went up to $135, which is still reasonable. During all this time I have received excellent care and advice from all these professionals, including the hospital staffs.
This has been my experience; I suspect many others have had similar stories and history's. Their mileage might vary.
Comparing Medicare vs. Medicare Advantage: Which Is Right for You? | U.S. News
Original Medicare vs. Medicare Advantage 2024 – Forbes Health
Thank you for sharing this. It helps 'us' understand this program from a personal (and critical) perspective simultaneously. I think the thesis statement of this article is found in these passages:
These companies thus make much of their billions in profit by routinely denying claims — 1.5 million, or 18 percent of all claims, were turned down in one year alone — leaving Advantage policy holders with the horrible choice of not getting the tests or procedures they need or paying for them out-of-pocket.
Given this, you'd think that most people would stay as far away from these private Medicare Advantage plans as they could. But Congress also authorized these plans to compete unfairly with real Medicare by offering things real Medicare can't (yet). These include free or discounted dental, hearing, eyeglasses, gym memberships, groceries, rides to the doctor, and even cash rebates.
You and I pay for those freebies, but that's only half of the horror story.
This year, as Matthew Cunningham-Cook pointed out in Wendell Potter's brilliant Health Care un-covered Substack newsletter, we're ponying up an additional $64 billion to give to these private insurance companies to "reimburse" them for the freebies they relentlessly advertise on television, online, and in print.
Using 'enticements' to get citizens to 'turn over/off' their original Medicare for 'bells and whistle' services and resources that will faintly or not often used and taking the receipts (unused monies as profit) from unused or little used services and resources. . . is morally wrong, particularly in the most needed times of an individual's medical journey.
BTW, I have not read Wendell Potter's 'take' on healthcare in our country, but I know he is a serious and highly respected writer/person.
All these "advantage" plans are literally scams. Beware! They push a miniscule amount of dental coverage, like a thousand dollars and free checkup & cleaning, vision coverage like a basic eye exam and glasses annually by an optometrist. These are chump change compared to the fine print in other areas. Depending on the insurance company they place a cap what they pay for in a calendar year or per occurrence. Treatments for rare conditions traditional Medicare may cover may not be covered by an insurance company as your Medicare provider. Crazy how easily they dupe people on the basic math.
That is an interesting point. Since there is so much money in the program to 'go around' why don't the plan let individuals get crowns, root-canals, and maybe even some cosmetic oral surgery done?
So now the two programs exist side-by-side. . . it seems. And the public is 'largely' unaware that one is not the Other. Or, knowledgeable of how to separate them apart in their minds.
Being retired military, I have Medicare A & B as primary and TriCare For Life as secondary so I have no need of a supplement. All reasonable expenses for Dr care, hospitalization, and pharmacy expenses covered with no out of pocket expenses. In essence, TriCare is my supplement and I also have the option of seeking care through the VA if I choose to. I find most of the ads for Medicare supplements on line suspect anyway.
I always wondered as to why they strike me as sales promotions (its excessive marketing). Now I know why. It is marketing to 'capture' people so the 'fun' and funding can begin and continue unabated. I will NEVER understand fully why our "authorities" allow its main assets (its citizenry) to become tools for profiteers' use.
That is my view as well.
"Private-ering" is what it is called. It's the taking of a public program and turning it over to private contractors/organizations/corporations for services and profit. Ironically, it does appear that Medicare-Advantage was supposed to 'end' the public program: Medicare. Instead we have both programs co-existing together!
Thus, here we are, handing billions of dollars a month to insurance industry executives so they can buy new Swiss chalets, private jets, and luxury yachts. And so they can compete — unfairly — with Medicare itself, driving LBJ's most proud achievement into debt and crisis.
[ACTION!] Let your members of Congress know it's beyond time to fix the Court and Medicare, so scams like Medicare Advantage can no longer rip off America's seniors while making industry executives richer than Midas.
~ from the article above.
UnitedHealthcare Medicare Advantage 2024-2025 Review
Dec 6, 2024
One Advantage advantage is in the copays. All my working life I had to suffer the humiliations of deductibles, denials and coinsurance. With MA I have a simple copay, in hard dollars, with no surprises, and the amounts are ridiculously small. I'm not responsible for any amount not paid by the insurer.
Good comment.