With Medicare Advantage, less for you is always more for insurers

David Wainer reports for the Wall Street Journal that people in Medicare Advantage plans–coverage through corporate health insurers–are likely to see fewer extra benefits next year. That’s no surprise, nor will it be a surprise for Wall Street when everyone enrolled in Medicare Advantage faces much higher out-of-pocket costs than they do today and no longer have government-administered traditional Medicare as an option. If the administration and Congress do not swiftly rein in tens of billions in annual overpayments to insurers offering Medicare Advantage, the only question is when people will appreciate that Medicare Advantage is a helluva disadvantage.

About 32 million people are  now enrolled in a Medicare Advantage plan, just under half the Medicare population. People are swayed by the ads offering “dental” benefits and free gym memberships and the seemingly trustworthy insurance agents steering them towards Medicare Advantage. Older adults and people with disabilities also can’t afford or don’t want to spend money on supplemental coverage in traditional Medicare that picks up most out-of-pocket costs, when they would like to believe they won’t be needing much health care. Since at any given time the vast majority of people don’t need a lot of health care, it has yet to sink in for them that insurers could take advantage of them if they are in a Medicare Advantage plan.

Wainer says that insurers now need to address greater health care spending and lower government payments to appease Wall Street and deliver handsome shareholder returns. What’s concerning is that the bad actor Medicare Advantage plans–and we don’t know how many or which ones those are, but they appear to be numerous–are still raking in billions of dollars in profits from Medicare Advantage that they seem not prepared to spend on their enrollees’ medically necessary care. What kind of a health care coverage model is that?

Wainer says that “if the current trends continue, plans will have to be more cautious in their offerings going forward.” Really? Truth is that people need to be more cautious about enrolling in a Medicare Advantage plan going forward. Medicare Advantage plan offerings in some, if not most, cases are concerning for people who need care–including restricted access to high quality doctors and hospitals, administrative hurdles and delays getting urgent care, inappropriate denials of care and high out-of-pocket costs.

Even with tens of billions in annual overpayments, Medicare Advantage plans delay and deny care inappropriately. And, many restrict access to high quality providers. Some have such high mortality rates that one group of academics found that the government could save tens of thousands of lives a year if it ended contracts with those Medicare Advantage plans.

If all goes well, people will start to see that Medicare Advantage is no free lunch when they most need care. In fact, it can easily cost people twice as much as what they’d spend on care in Traditional Medicare with supplemental coverage, with huge delays and obstacles to getting care.

Wainer is correct that threats from insurers about cutting extra benefits in Medicare Advantage are designed to pressure the Biden administration to continue to overpay them. The administration is currently deciding Medicare Advantage rates for 2025. Beware: If CMS steers away from its current course of reining in Medicare Advantage overpayments, you will pay ever higher Medicare premiums and, before long, face signficantly higher Medicare costs.

Here’s more from Just Care:

• Costs in Medicare Advantage present barrier to care
• OIG finds widespread inappropriate care denials in Medicare Advantage
• If you’re in a Medicare Advantage plan, watch out! Your doctor or hospital might no longer be in-network
• Will the Biden administration rein in Medicare Advantage overpayments in 2025?
• Ten ways to improve Medicare Advantage