The Kaiser Family Foundation has a new report on Medicare Advantage plans–private health plans that offer Medicare benefits–in 2020. Here’s what you might not know, including the latest data:
- Enrollment in Medicare Advantage plans is now just over 24 million or about 40 percent of the Medicare population. In some counties, only 1 percent of people are enrolled in Medicare Advantage; in others, it’s as many as 60 percent.
- Average annual out-of-pocket costs for in-network care in HMOs and PPOs is $4,925; the average out-of-pocket cap for the combination of in-network and out-of-network care in PPOs is $8,828. Drug costs are not included in these caps.
- Virtually everyone enrolled in a Medicare Advantage plan must get prior approval before receiving most costly medical services; preventive care services generally do not require prior authorization.
- If you are hospitalized for more than five days and enrolled in a Medicare Advantage plan, your out-of-pocket costs are likely to be higher than in traditional Medicare (without supplemental coverage).
- Six in ten people in Medicare Advantage plans pay no additional premium, and they generally get prescription drug coverage. Nine in ten Medicare Advantage plans offer prescription drug coverage. The average premium for the 40 percent of enrollees who pay a premium is $63 a month.
- Of people enrolled in Medicare Advantage, about 20 percent have retirees benefits from employers or unions who require them to join in order to get their retiree wrap-around benefits. In some states, more than three in ten Medicare Advantage enrollees get retiree wrap-around coverage. And, in New Jersey, West Virginia and Michigan, four in ten Medicare Advantage enrollees or more get retiree wrap-around coverage.
- United Healthcare, Humana and BlueCross BlueShield have the greatest number of Medicare Advantage enrollees. More than one in four (26 percent) are enrolled in United Healthcare, nearly one in five (18 percent) are enrolled in Humana and more than one in seven (15 percent) are enrolled in BlueCross BlueShield.
Here’s more from Just Care:
- Coronavirus: Update on Medicare Advantage and other coverage
- Ten ways Medicare Advantage plans differ from traditional Medicare
- Four things to think about when choosing between traditional Medicare and Medicare Advantage plans
- Most people choose traditional Medicare over Medicare Advantage
- 2020 Social Security and Medicare Trustees report
While I agree that Medicare Advantage (MA) plans are over-subsidized by the federal government, they are often a good value from the perspective of the enrollee who is relatively healthy. I have a Blue Cross MA plan, including drugs, for myself and my wife and pay no premiums. I do have modest copays (e.g., $15-20 for doctor office visits and $40-50 for specialists) and the risk of paying $250/day for up to 7 days if hospitalized. So, assume I get hospitalized once every 5 years, I pay a maximum of $1,750 in hospital copays, plus the doctor copays, some drug copays, etc. – thus maybe a total of $2,000-4,000 every 5 years or so. But if I pick regular Medicare and a supplement (Medigap), I pay, a premium of about $150/month for myself and another $150/month for my wife, or a total of $3,600 per year. Over 5 years, that’s a definite expense of $18,000, vs. the Medicare Advantage route of merely risking the payment of perhaps $4,000 if hospitalized. There’s no comparison, cost-wise. Okay, another consideration is that with the MA plan I’m limited to a particular network of doctors and hospitals. But with BCBS plans, these are typically pretty broad, and mine is a PPO anyway. Also, my plan now generally has no pre-authorization requirement, a trend that may be growing among these types of plans, since pre-auth. is not all that useful within a network.
The big issues related to Medicare and Medicare Advantage for me are these two:
1. Now, if one is in an MA plan and wants to switch back to traditional Medicare and a supplement at the next annual enrollment, the insurance company that provides the supplement can require medical underwriting. This makes no sense if one has been insured all along, and is not done for most under-age 65 plan switches, either within the ACA exchanges, or among employer plans. There’s no significant risk of adverse selection. The Medicare agency (CMS?) should ban this restriction.
2. Generally, the supplements to Medicare are not very valuable and just fill in copays, deductibles, and coinsurance that many enrollees could otherwise budget for and afford to pay. As I described above, over the long term, the out of pocket costs would be less than the premiums paid for these over-priced plans. But their one valuable feature is that the supplemental plans provide “catastrophic coverage” in case the plan member is hospitalized for a long time and runs out of the days covered under Medicare Part A itself. This is a very remote risk but is still one that would be costly for the few that might face it, if not for the Medigap supplement. CMS should just expand Medicare Part A itself to provide this catastrophic protection, so that enrollees could feel more comfortable about not bothering to get the supplement in order to just fill in the copays, etc.
I have written to AARP to lobby for these two changes, but neveer heard back from them. That’s not surprising, since much of their income comes from promiting their own United Health Care Medigap plan.
There are both financial and care risks in a Medicare Advantage plan. One risk, as we know, is that many people skip getting care because deductibles and copays are prohibitively expensive. And, you point out that if you need a lot of care, you will likely spend more than you would in traditional Medicare. The other risk is that you might not be able to get the care you need, either because the specialists you need to see are not in-network or you are out of your area or because the Medicare Advantage plan delays or denies you care your doctor says you need. The data suggests that this is far more common than people realize. See this recent report from the Office of the Inspector General. https://oig.hhs.gov/oei/reports/oei-09-16-00410.pdf
Yes, you might be able to leave when you need a lot of care and cannot get the care you need, but you might be locked in. And, yes, traditional Medicare should have catastrophic protection.