The Annual Medicare Open Enrollment period began October 15 and ends December 7. If you have Medicare, you are likely to see endless ads and receive lots of mail from an assortment of insurers chomping at the bit to get you to enroll in their Medicare HMO plans, called “Medicare Advantage.” That’s how the big insurers rake in the big bucks, tens of billions of dollars a year.
Unfortunately, our government does a poor job of helping you to understand differences between Traditional Medicare, which the government administers directly, through the Centers for Medicare and Medicaid Services (CMS), and Medicare Advantage plans, which are HMOs and PPOs administered by corporate health insurers that contract with the government. For sure, you can’t trust the corporate health insurers or their sales agents to tell you what you need to know.
There are five basic differences between Traditional Medicare and Medicare Advantage that you should understand.
1. Coverage: While in theory, you get the “same” benefits, in practice, you get far fewer covered services in Medicare Advantage.
Traditional Medicare. Traditional Medicare covers the medically reasonable and necessary care your physicians say you need. An insurance company is not second-guessing your doctors.
Medicare Advantage. Medicare Advantage plans cover significantly fewer services than Traditional Medicare, particularly, fewer costly services, as has been documented over and over again. To maximize profits, insurers engage in widespread inappropriate delays and denials of care and generally require you to get approval before they will pay for most costly services. Since you need insurance to protect you in case you get sick or need costly health care, even if you don’t need it now, think twice before signing up with a Medicare Advantage plan. According to one comprehensive study, the worst ones are responsible for tens of thousands of preventable deaths each year.
2. Health care providers: You have more choice in Traditional Medicare.
Traditional Medicare. Traditional Medicare covers your care from almost all doctors and hospitals anywhere in the United States. Almost all take Medicare and more than 90 percent “take assignment,” accept Medicare’s approved charge as payment in full. The most they can charge is 15 percent above that amount.
Medicare Advantage. Insurers offering Medicare Advantage restrict your access to top physicians and hospitals, covering your care only from “in-network” providers. In-network providers can be few and far between and are often not located outside your community. If you travel or spend time away from your primary residence, a Medicare Advantage plan usually will not cover your care, except in emergencies. Even the providers listed in insurers’ directories often are not taking new patients or have left the network. So, if you are thinking of joining a Medicare Advantage plan or are in one now, talk to any of the doctors you know you want to continue seeing to confirm that they are in-network. Keep in mind that a lot of the Medicare Advantage plans have lower quality providers in their networks and might not have a cancer center of excellence as part of their network.
3. Costs: Whether you are in Traditional Medicare or Medicare Advantage, you must pay a Part B monthly premium, unless you have Medicaid or are enrolled in a Medicare Savings Program.
Traditional Medicare. Traditional Medicare charges you a hospital deductible and 20 percent of the cost of your medical care, unless you have supplemental coverage, either Medigap, which you buy in the individual market, Medicaid, or retiree coverage from a former employer. If you have supplemental coverage, most of your costs will be covered. Traditional Medicare does not have an out-of-pocket maximum.
Medicare Advantage. Insurers in Medicare Advantage might charge a premium on top of your Part B premium. They have an out-of-pocket limit but it is usually many thousands of dollars for in-network care. So, if you need a lot of care or go out of network, your out-of-pocket costs could be sky high. You cannot buy supplemental coverage to pick up your out-of-pocket costs. Each Medicare Advantage plan has its own out-of-pocket maximum.
4. Drugs:
Traditional Medicare. If you have Traditional Medicare, you will need to buy Medicare Part D prescription drug coverage if you want drug coverage. The Part D premium ranges considerably in a given area. Compare your options!
Medicare Advantage. Insurers in Medicare Advantage usually provide your drug coverage at no additional premium. But, they might not cover the drugs you need and, if they do, they might charge a large copay for them. Be sure to check.
Whether you’re in Traditional Medicare or a Medicare Advantage plan, examine differences in your drug costs among Medicare Part D drug plans. And, keep in mind that it is possible, even likely, that you might spend less getting some of the drugs you take from Costco or another mail-order pharmacy than paying the copay for them through your Part D plan. Part D plans can have higher copays than the total cost of the drug from a low-cost pharmacy.
5. Quality:
Traditional Medicare. In Traditional Medicare, where you choose the providers you see and the treatments you receive, you have control over the quality of your care.
Medicare Advantage. Insurers in Medicare Advantage plans restrict your access to providers and treatments. For example, if your doctor thinks you need 50 days of inpatient rehab therapy, your Medicare Advantage plan still might decide you only need 10 and will only cover 10 days.
Bottom line: In Traditional Medicare, your doctors and hospitals have every incentive to provide you with all the care they think you need, and Traditional Medicare will cover it. Medicare Advantage plans receive a fixed amount from the government to cover your care regardless of how much they spend on your care. Consequently, they profit from withholding needed care and, therefore, incentivize their physicians to limit the care they provide you. The less money a Medicare Advantage plan spends on your care, the more money the Medicare Advantage plan has for its shareholders.
Since there’s no good data to distinguish among Medicare Advantage plans–the star-ratings are a farce–you are gambling with your health and life when you enroll in a Medicare Advantage plan. To learn more, read this blog post by Diane Archer and Theodore Marmor on the fundamental difference between traditional Medicare and private insurance.
