At this time of year, ads hawking “Medicare Advantage” plans flood every possible media outlet, imploring seniors to call 1-800 numbers and contact their local insurance brokers for “free Medicare evaluations” where brokers can sign them up for Medicare Advantage (MA) plans, also called Part C plans, that offer premiums a bit lower than traditional Medicare and freebies like vision screenings, dental cleanings, gym memberships and a monthly allowance to spend on drugstore merchandise.
These plans definitely sound alluring, but don’t be fooled.
What seems like a good deal up front will likely be far more expensive in the long run because “Medicare Advantage” plans are not real Medicare plans. They are private insurance sold by for-profit insurance companies and they push subscribers into dealing with big bureaucracies that decide which doctors you can and can’t see, what care you can or can’t get, and that can deny you care for vague reasons if it isn’t in the companies’ best financial interests to pay for it.
In the words of my former colleague Wendell Potter, former Vice President of Corporate Communications for Cigna Health Insurance, who became an insurance whistleblower, “Medicare Advantage” plans are neither Medicare nor an advantage. They’re a scam to keep people locked in the private, for-profit health insurance market where companies can continue to exploit them for years, even decades, to generate profits.
What’s so bad about Medicare Advantage plans?
“Medicare Advantage” (MA) plans were introduced 25 years ago on the theory that competition in the private insurance market would result in better insurance and more efficiently-run plans. MA plans are funded by the government, which pays private insurers a set amount for every person they enroll. The amount varies based on how healthy subscribers are, and the government pays higher rates to private insurers for the sicker subscribers.
Insurers must spend 85% of the money they get from the government on patient care. The other 15% is pure profit, so insurers have a built-in incentive to deny coverage to preserve their profits. Enticing seniors into purchasing MA plans early by offering them lower premiums and freebies while they are younger and relatively healthy, generates more profits for insurers in the long run. But as MA subscribers age and need more medical care, they increasingly face getting denied by their insurer for treatments and procedures they may need. This can force MA subscribers to have to go without care, or pay out of pocket for more of their own medical care.
What you need to know:
“Medicare Advantage” plans are private insurance plans that use the name “Medicare” to generate trust among seniors. They are NOT real Medicare plans. If you buy a “Medicare Advantage” plan, you are paying a private insurer to become a gatekeeper between you and your medical care.
1-800 phone number television ad touting “free Medicare benefits review” to recruit Medicare Advantage subscribers
MA plans restrict subscribers to closed networks of doctors and hospitals, called Health Maintenance Organizations (HMOs) or Preferred Provider Organizations (PPOs). These networks typically are limited and restricted to local areas, and can potentially block subscribers from getting the best care for a given condition. For example, if you are diagnosed with a rare form of cancer that can only be treated at a specialized national medical center like Mayo Clinic, Memorial Sloan Kettering in New York, or MD Anderson Cancer Center in Texas, but this medical center isn’t in your network, your “Advantage” plan can refuse to pay for the care you need. If you have an accident or get sick while outside of the state, and seek care at an urgent care clinic or an emergency room nearby, you could get stuck with thousands of dollars in medical bills because the doctor and medical facility you used were outside your network and your MA plan won’t cover it. MA plans also require doctors get pre-approvals from insurers for many tests and treatments, and get pre-authorization for surgeries and procedures, so if you come down with a fast-moving illness that requires quick medical care, getting pre-approvals and pre-authorizations will needlessly delay your care and cost you precious time that could make a big difference in your medical outcome. Under MA plans, you usually need a referral to see a specialist. MA plans can also put people in the desperate position of having to battle an insurance company while they are sick or injured, to get the care they need.
Contrast this with original or “traditional” Medicare plans, which do not operate off a profit motive. Original Medicare is a government program. The only mandate original Medicare has ever had is to “help the nation’s elderly meet their hospital, medical, and other healthcare costs.”(pdf) Traditional Medicare subscribers can go to any doctor and any facility in the country that accepts Medicare assignment (payment). In most cases, you don’t need a referral to see a specialist. No pre-authorization or pre-approval is required for tests, treatments or procedures you need. Original Medicare has less hassles and headaches and pays it’s portion of the Medicare-approved costs for your care easily, and whenever and wherever you need care. After you pay the annual deductible for the year, which is in the $250 range, there are no further deductibles, copays or coinsurance to worry about.
Fraudulent billing and overcharging are pervasive
Another big problem with “Medicare Advantage” plans is that the corporate insurers that provide these plans have often engaged in fraudulent billing as a way to bilk the government out of more money.
Audits reveal Medicare Advantage plans typically overcharge the government by millions of dollars, at a rate of more than $1,000 per patient per year, on average. Often companies add fraudulent billing codes for conditions patients don’t actually have, like chronic obstructive pulmonary disease (COPD), diabetes or cardiovascular disease, to make subscribers appear sicker to the government so they can collect more money while not actually providing services. The costs to American taxpayers of this fraudulent billing have skyrocketed over the past decade as more seniors are coerced into signing up for “Medicare Advantage” plans. This fraudulent added expense is also hastening the demise of Medicare overall, since costs of the program have increased greatly due to these private insurers’ malfeasance.
In October, 2022, the New York Times reported that 9 of the 10 biggest Medicare Advantage plan providers in the country have been accused of billing fraud. The federal government has sued four of the five biggest players in the national health insurance market — UnitedHealth, Humana, Elevance (formerly Anthem) and Kaiser — for fraudulently over-diagnosing subscribers so they can fraudulently charge the government more money.
So what should you do?
Local TV ad seeks to get people who already have original Medicare to switch to a privately-owned Medicare Advantage plan, to the detriment of the subscriber
A 2021 survey found over half of people in America are confused by health insurance, so if you’re confused, you’re not alone.
Private insurers like customers who are confused or clueless, because it’s easier to manipulate a confused person into buying a plan that will benefit their company’s bottom line, but likely be detrimental to the subscriber in the long run.
Medicare Advantage plans are fraught with problems like denials of care, fraudulent billing, difficulty in getting pre-approvals and pre-authorizations for tests, treatments and procedures, copays and coinsurance. Medicare Advantage plans have been raking in record profits for private insurers while undermining original Medicare by unnecessarily raising program costs through rampant fraudulent billing. At the same time, private insurers are putting the most vulnerable subscribers at risk by denying them care and subjecting them to bureaucratic obstacles to try to keep them from getting necessary treatments and procedures, especially if they are expensive.
So when you sign up for Medicare, don’t be fooled.
Be sure to sign up for traditional, government-operated Medicare, which pays 80% of medical costs. Get a supplemental plan to cover the 20% the government doesn’t pay, and get a Plan D drug coverage plan. At all costs, DO NOT sign up for a “Plan C” or a “Medicare Advantage” plan. If you’re already on a Medicare Advantage plan and want to get out of it, you can switch to original Medicare during the open enrollment period that runs from October 15 to December 7 of each year. After you sign up, your original Medicare plan will take effect on January 1 of the coming year. See an insurance broker to make this change, but beware that brokers may still try to persuade you to keep a Medicare Advantage plan instead of original Medicare, because brokers often get paid higher commissioners for recruiting people into MA plans, or for keeping them in such plans.
Forgo the lure of the slightly lower premiums and freebies up front in favor of signing up for a traditional Medicare plan. Traditional Medicare puts beneficiaries’ best interests — and not profits — first. It will give you better, simpler coverage that will be easier to understand, that will be more reliable and that will make your medical care more affordable and less of a hassle in the long run.
If you have the time and want more information on why MA plans are bad, I suggest watching this 12 minute video (below) by a doctor that explains the problems with “Medicare Advantage” plans, and why people are better off avoiding them:
It’s well worth the time to watch it before you choose a plan. The doctor in the video talks fast and packs in a lot of information, but I guarantee you will understand everything he has written on the white board by the time he’s done.
