HR3590 Patient Protection and Affordable Care Act bill was passed by the Senate December 24, 2009. Sunday it was passed by the House 219-212. President Obama signed it into law yesterday.
How will passage of this new bill affect Medicare?
Don’t be fooled by the politicians who are using the Medicare Scare tactic as a reason for Seniors not to support the bill. Last night, a Senator opposed to the bill kept telling a reporter during a T.V. interview that “we can’t cut Medicare by $132 Billion to support this bill, and I’m proposing an amendment to reverse this decision during the upcoming reconciliation proceedings occuring now in the Senate.”
The senator was very misleading in his statement about Medicare. Traditional Medicare benefits will not be cut. The term Medicare is being used loosely to imply many Medicare beneficiaries will be afftected. Benefits for those enrolled in Medicare Advantage programs may be cut. This represents about 22% of all Medicare beneficiaries. The remaining 78% of Medicare beneficiaries will not be affected. If you have a Medicare Supplement policy, you are enrolled in Traditional Medicare. If you do not have a Medicare Supplement plan, you are enrolled in Medicare Advantage.
What is Medicare Advantage?
Medicare Advantage plans are programs run by private insurerslike Humana and are an alternative to Traditional Medicare. Funding for these plans will be cut by $132 billion over the next ten years. Medicare Advantage plans offer extra benefits that seniors in traditional Medicare don’t get. It is possible that these extra benefits will be dropped as Medicare Advantage plans feel the budget squeeze.
Now here’s the real story about Medicare Advantage!
Medicare Advantage is a controversial program because those on Traditional Medicare believe that it should be called Medicare Dis-advantage for these reasons:
- Everyone in Traditional Medicare pays about $36 per year per person to fund Advantage plans.
- The Federal government provides a subsidy of about $1,300 per person more than what it provides to Traditional Medicare beneficiaries.
- During the past six years private insurers have received more than$46 billion in Federal subsidies to administer these plans.
- The Government General Accounting office reported in 2006 that private insurers (a very select few) made a profit of $3.3 billion dollars on Medicare Advantage plans.
AARP supports the language in the Health Reform bill to cut Medicare Advantage funding. Why? Many believe that Medicare should be fair to everyone not just those who live in major populated areas like South Florida where about 40% of eligible Medicare beneficiaries are on Advantage plans. These folks are screaming the loudest and their representatives in Congress are caught up in a political cross fire because 40% represents a large voting base. So Medicare Advantage is now a policitcal issue, not necessarily a medical issue. And, senators from this area and senators from other regions in the country with heavily weighted Advantage participants will most likely be voting on the Reconcilation fix to restore the cuts made to subsidize Advantage programs.
Those in rural areas have limited access to Advantage plans. I believe that Advantage programs are in trouble because there won’t be much sympathy for those on Advantage plans, when more people learn that beneficiaries on the plans receive a wide array of additional benefits including no or low cost premiums, generic drugs, andaccess to gym memberships. And, they get the additional premium-savings of not needing to pay for Medicare Supplement insurance. In my opinion, the issue of fairness for all Medicare beneficiaries will gain support for the funding cuts that are included in the Health Reform bill. In addition, passage of a new bill in 2008, will severly restrict the use of the private fee for service plans, and direct these folks to an HMO or PPO network, and the majority of my clients do not want this type of restriction.
What should I do if I’m on a Medicare Advantage plan?
If you are age 80+ and you enrolled in an Advantage plan because you were paying almost $3000 or more for your Medicare Supplement insurance, and are uninsurable, then you should keep the plan, but be aware that private insurers can increase you’re out of pocket maximum risk. Today, the risk is about $5000, but if you’re saving the $3,000 of premium by not needing a supplement plan, your risk is minimal. I have 4 clients age 80+ on Advantage plans and recommended them only for the reasons stated above.
If you are in an Advantage plan and don’t meet the above criteria, give me a call. We need to talk. This past week a prospective client age 65 called to tell me that he is enrolling in an Advantage plan, after I designed a Traditional plan for him.. and I tried to talk him out of it… but the Advantage benefits were too appealing, and the prospect would not listen to my warning of what might be ahead down the road.
I am no longer recommending Advantage plans for these reasons:
- Under the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) signed into law July 15, 2008 significant restrictions have been placed on Medicare Advantage (PFFS) private fee for service plans. My four clients are all enrolled in PFFS plans because my clients did not want to be restricted to a network of approved and coordinated hospitals and providers. They were allowed to see any provider who accepts Medicare, and accepts the payment conditions of the Advantage plan.
- Under the new MIPPA provisions, starting in 2011, PFFS Medicare Advantage plans offered in areas where two or more Medicare Advantage HMO or PPO plans are offered must obtain legal contracts with networks and providers. This will change the nature and perceived value of private fee for service contracts, as these plans must now organize and coordinate providers. Enrollees in rural areas may be left without a provider in their community, and others may find themselves without coverage, as some PFFS plans may be unable to find cooperative providers.
- These new regulations my symbolize a negative view of Medicare Advantage PFFS plans by the federal government. According to the National Committee to Preserve Social Security and Medicare, the government pays 17% more to PFFS plans than would be paid per beneficiary under Traditional Medicare plans.
- This bill all but ensures that all MA plans soon will be restricted to some kind of network. The most attrative part of the Medicare Advantagte PFFS plan was their “absolute freedom”, and that’s why I recommended them to the four clients now covered. But, in my opinion, the new regulations will do much to curb the appeal these products once had, as the only Medicare product with actual freedom of choice will be Medicare Supplement plans.
A client from Scottsdale, Arizona recently informed me that the Mayo Clinic in Scottsdale will no longer accept Medicare Advantage plans.
I am only recommending Medicare Supplement plans for these reasons: Medicare Supplements are solid and stable products that are widely accepted by physicians across the country. According to a 2007 study by the US Centers for Medicare and Medicaid Services, approximately 99.7 of physicans in the United States accept Medicare assignments. Medicare supplement policies are not restricted by approved networks or primary care physicians, so our clients are are virtually assured of coverage no matter where they are.
I hope after reading this post, the next time you hear a politician raise the Medicare Scare and why the new Health reform bill will cut your Medicare benefits, take a deep breath, and say…he or she is talking about the controversial and political hot potato Medicare called Medicare Advantage… and I’m on Traditional Medicare… and the phrase Medicare cuts does not apply to me….Remember if you are on Traditional Medicare, you are at a dis-advantage already, the approved cuts in the bill will most likely take away some of the goodies that you don’t have access to now, and level the playing field with fairness to all beneficiaries.
Coach
PS: Those of you remember the T.V. show Dragnet… start using your Jack Webb impersonation when you’re discussing Medicare and Health Reform at coffee… by saying… here are the facts… just the facts let’s take the emotion out of this discussion…Here’s the real story.
