A few weeks ago, I reported that most seniors on Medicare tend to stick to the plan they initially chose even though as the years go by they might be able to get a cheaper model by junking the old one. Medicare beneficiaries are more like bank customers than car buyers, it seems. Once they choose a plan'whether it's a traditional Medigap policy or one of the new Medicare Advantage (MA) plans'they keep it.
A study from the National Bureau of Economic Research, a private, nonprofit research organization, checked out this phenomenon and concluded that if seniors stayed in a plan they could end up paying ten percent more in premiums than if they switched to a newer plan. New plans often have cheaper premiums because health insurance sellers'engaging in a kind of bait and switch'entice shoppers with low price tags and then as they get older and sicker and have medical claims, the premiums go up. Still, people hang on to what they have.
Currently, Medicare Advantage sellers are engaged in heavy marketing due to the MA open enrollment period that ends on December 7th. The ads don't say much but give enough clues to tip you off that you must ask lots of questions and dig deep to find out what you're getting. A solicitation I received from UnitedHealthcare touted the plan's zero monthly premium, zero copay for a primary care doctor's visit, zero medical deductible and zero prescription drug deductible. A closer look revealed that the copays for expensive drugs were steep'$95 for non-preferred brand drugs and 33 percent of the cost for a specialty drug. Then came the fine print warning: 'Limitations, copayments, and restrictions may apply. Benefits, formulary, pharmacy network, premium and/or co-payments/co/insurance may change on January 1 of each year.'
Putting premiums and co-pays aside, there are times when you do want to switch plans, and that's when you learn about or confront the limitations in Medicare Advantage plans that could prevent you from getting the care you need. Two years ago, the Medicare Rights Center, a consumer advocacy group based in New York City, found that seniors did not know they had to get their care only from doctors in the MA plan's network. Consumers said they had trouble getting doctor appointments and got coverage denials for Medicare services. At the root of these problems were the sales pitches and marketing abuse on the part of health insurance sellers eager for a quick sale.
About 20 percent of those who disenrolled did so because the MA plan denied claims for medical services leaving them to pay the bills out of pocket. Technically, the Medicare benefits in a Medicare Advantage plan and that of a traditional Medigap plan are the same. The government says they have to be, but that doesn't mean your access to them will be the same, says Bonnie Burns, a policy specialist for California Health Advocates, a Medicare advocacy group. 'All of the MA plans have their limitations. Some are very structured; others are more generous,' she explained. 'With a Medigap plan you just go to the doctor when you need to. With an MA plan you would need permission to go to the doctor.'
In the end, the tradeoff comes down to having the freedom to choose your health care providers or wanting to save money. Medigap policies may cost more than MA plans. Still, with an MA plan you might also be buying some big headaches down the road. There's a tiny escape hatch though between January 1 and February 14, 2013. If you buy an MA plan and don't like it, you can get out of it and switch into traditional Medicare and buy a Medigap policy with a stand-alone drug plan. The hitch might be finding a Medigap policy, a problem I will look at in another post. Nothing is easy when it comes to Medicare.
More Blog Posts by Trudy Lieberman
Trudy Lieberman, a journalist for more than 40 years, is an adjunct associate professor of public health at Hunter College in New York City. She had a long career at Consumer Reports specializing in insurance, health care, health care financing and long-term care. She is a longtime contributor to the Columbia Journalism Review and blogs for its website, CJR.org, about media coverage of health care, Social Security and retirement. As a William Ziff Fellow at the Center for Advancing Health, she contributes regularly to the Prepared Patient Blog. Follow her on twitter @Trudy_Lieberman.