Money Makes the World Go Around

Along with the interminable ads for politicians, my TV feed is now full of ads from big name insurance companies offering me added benefits if I sign up with them during Medicare Open Enrollment Season. My advice?  Ignore them, along with the ads for politicians!

I am passionate about aging adults getting the best service for their health care dollar. And it isn’t with any company selling you a Medicare Advantage (MA) plan, also known as Medicare Part C.

What Is Medicare Advantage?

As you know, Medicare is an insurance plan financed through payroll tax deductions. Medicare Advantage, on the other hand, are insurance policies sold to you by for-profit insurance companies that you pay premiums to over and above what you have already paid into Medicare. Bluntly speaking, the “advantage” is all in favor of the company selling you the insurance. It is packaged, however, as providing you with added benefits like dental, vision, and other perks.

While it is true original Medicare doesn’t cover glasses or visits to the dentist, what these MA plans never bother to tell you is that their coverage is limited, and your choices are restricted to providers contracted directly by the MA plan. Bottom line here?  The MA plan has been tailored to increase profit margins for the company by paying as little as possible to providers and limiting the amount of services you receive for your coverage.

Makes for Good Business, but Lousy Health Care

This is a powerful profitability model for the MA plan, but it makes for really poor health care. Let me give you an example. I spent 20 years as a licensed psychologist. I chose to take insurance so that I could provide services to folks on Medicare. While the majority of my patients used their Medicare benefits to pay for my services, there was a portion who were members of MA plans.

Before I could take insurance, I had to apply to become an approved provider for both Medicare and MA plans. I had to fill out forms outlining my education, training, and demonstrate that I was in good standing as a licensed psychologist. Each plan has its own forms that need filling out, so I filled out the paperwork for seven different plans. Once they determined that I passed muster, I signed a contract with each and agreed to provide services according to that plan’s particular restrictions and rates of pay.

When I signed on with them, I agreed to be paid what they decided my time was worth. I did not have a say in my hourly rate. One of these companies paid me $40 a session for the 20 years I offered services to their beneficiaries. Never an increase over 20 years. At least Medicare rates were subject to review! As a comparison, fees charged by some of my colleagues who only took private pay for the same service ran between $90 and $150 per session.

Depending On Your Point of View

From my point of view, in order to provide you with the services you sought and for you to use your insurance, I had to accept a fee set by the MA plan that did not take into account my skills, experience, and costs. Frequently there were additional requirements to obtain pre-approval for some services, accept limits on others, and having to justify what I did during a session to people who did not have my training or education in order to receive payment.

From a beneficiary’s point of view (you), it meant delay and frustration in having to call one provider after another only to be told they weren’t taking new patients, or worse, never hearing back at all. Assuming you were able to set up an appointment, you were told you only had six visits to complete your work. Coverage did not provide assurances that rates you paid for your plan would be stable. And, you had to pay me a co-pay no matter what!

From the MA plan’s point of view, this made predicting how much money they would make easy and insured company profitability.

This Isn’t Sour Grapes: It’s Bad Health Care!

Honestly, this is why so many mental health providers, ranging from master’s level folks up to psychiatrists, have decided NOT to take insurance. Medicare, at least, offers transparency. It publishes its rates and they are negotiated and approved by Congress. And, by the way, I was paid more by Medicare for my services than by the MA plan companies.

Health care, however, is not like shopping for the best deal on your dream car or purchasing cereal in bulk. This is about finding a good fit with a provider who is there to oversee your care, work through your health issues, and make sure you are better. This is best decided by and between you and your provider.

How Are Costs Determined and Fees Set? What Should Health Care Cost?

Hang in here with me. I promise I won’t take you into the wormhole of setting Fee for Services rates based on Current Procedural Terminology codes, but you should understand what you are paying for!

Up until the mid-1960’s, you would pay your doctor whatever fee s/he billed you when you saw them. There really wasn’t much information collected and shared among professionals or at the government level about what treatments physicians were providing or what costs were involved. And, remember, there weren’t as many bells and whistles back in the 1960s – no MRIs or CT scans, only basic blood work, X-rays, and fairly straightforward and predictable costs for bandages, casts, crutches, and medicines. Providers decided how much they should charge based on what their patients’ could afford to pay.

What Should I Charge for Doing This?

When Medicare came into being in 1965, the government, understandably, needed to collect information on what kinds of care was being provided. This required a means of reporting that systematically identified all the different pieces/parts involved in treating someone:  what was wrong (types of service), what was needed (personnel, materials), and how long it took.

The American Medical Association took on this task, and came up with Current Procedural Terminology (CPT) code. There are over 10,000 different codes used to describe services. To this day, the AMA has the sole responsibility for maintaining them.

Fees paid by Medicare are based on which CPT code is used. In my field, fees are based on how long a session goes (15, 30, 45 or 60 minutes), what kind of session it is (intake, crisis or regular session), and what the credentials of the provider are (MD, PhD or LCSW). These fees are negotiated by the AMA, presented to Centers for Medicare and Medicaid, and ultimately submitted to and voted on by Congress. And that’s how things went until 2003, when the Medicare Modernization Act was passed, and the insurance lobby saw a way forward to make some money.

Medicare Plans A-B-C-D and Medicaid Explained

Since 1965, original Medicare (Part A) has paid for for big ticket items such as hospitalization, skilled nursing, hospice, lab tests, surgery, and home health care. The deal is Medicare pays 80 percent of these costs and you, the beneficiary, pick up the remaining 20 percent.

Medicaid

Folks with limited income are eligible to get Medicaid to cover these and additional costs. Eligibility requirements are based on income, but coverage varies by state. This can be very confusing!

Medicare (Part B)

Medicare (Part B) premiums are automatically deducted from your Social Security check. Part B is designed to cover “medically necessary services” and “preventative services”. This includes outpatient doctor visits, flu shots, and the like. There are deductibles associated with Part B that you pay out of pocket. Private insurance companies offer additional coverage known as supplemental insurance to cover these out of pocket costs, but you are not required to purchase supplemental insurance.

Here’s a Challenge!

For most healthy aging adults with no chronic medical conditions, you probably don’t need any additional coverage. To see if you can save money on your insurance costs, add up what you spend on buying over-the-counter medications and vitamins each month and see if that is equal to or more than what a supplemental insurance premium would be.

Medicare Advantage Plans (Part C)

Unlike Medicare, MA plans are owned and operated by for-profit insurance companies. Original Medicare is funded through FICA taxes. You have been paying into original Medicare from your very first job. But not one penny of what you have been paying goes toward a Medicare Part C premiums. And this is what doesn’t make sense to me. Why would anyone toss away all that investment and, instead, pay out of pocket for limited services when you can get what you already paid for and then some with Medicare A and B?

Many people buy coverage based on price alone. A lot of folks say that supplemental insurance plans are too expensive. To be fair, if you are healthy and aren’t really in need of anything more than an occasional visit to your health care provider, and don’t mind being restricted to a limited pool of providers, and believe the insurance industry needs your support and money, then you are absolutely correct! I am sure the insurance companies are counting on thinking just like that!

According to Wendell Potter, former executive at Cigna Health,

“The Big 7 for-profit insurers control 69% of the Medicare Advantage market. 85% of all new Medicare Advantage enrollment went to for-profit insurers in 2022. 99.3% of UnitedHealth’s enrollment growth has been in government programs over the past 10 years. The Big 7 for-profit health insurers made $43.8 billion in profits, and they took in $620.6 billion in revenue, much of it from taxpayers.

53% of all Medicaid beneficiaries are now enrolled in health plans managed by the Big 7.”

Medicare (Part D)

When President Bush overhauled Medicare in 2006, a controversial Part D was added as a specific benefit to cover medications. To be fair, the days of “take two aspirin and call me in the morning,” were long gone. By 2006, it was clear that those who were eligible for Medicare should receive financial support to pay for the ever-rising costs of medications that were now the primary intervention used to treat illness.

The benefits of drugs that have truly proved life-saving is undisputed. But paying for the development, production, and distribution of these biochemical miracles continues to be a cost coverage nightmare for insurance companies. And Big Pharma has not been shy in setting high fees for its products.

This Little Piggy Went to Market

Pharmaceuticals have their own closed-circuit market. Developing a new drug takes time and money. Bringing it to market includes trials and approval by government. Once approved, the medication needs to be packaged and sold. Your licensed healthcare provider has to be told about this wonderful new drug in order to prescribe it. This requires advertising and sales representatives.

Once your health care provider is on board, s/he can start to prescribe. That prescription is sent to a pharmacy. The pharmacy buys the medication from a manufacturer and sells it to you. These costs are covered by your insurance. Pretty straightforward, right?  Well, not exactly.

Private insurance companies cover the cost of medications by negotiating a price with Big Pharma. This turns out to be a gold mine!  In negotiating a price, the insurance company can leverage its profit by buying in bulk and passing costs on to you, the beneficiary. They do this by owning pharmaceutical distribution companies that allow them to manage both purchasing and controlling how the product gets sold. In essence, they buy from themselves and sell to themselves, then charge you double.

Pharmacy Benefit Management (PBM) Market

In other words, insurance companies saw an opportunity to act as middlemen in purchasing and distributing pharmaceuticals. According to Pharma.org:

“The three largest PBMs – CVS Caremark, Express Scripts and OptumRx – manage 80% of all prescriptions and own, or are owned by, some of the largest insurers in the country. These large corporations influence which medicines are covered by insurance and how much patients pay out of pocket. Conflicts of interest can lead PBMs to make decisions that may drive up costs for patients. For example, the three largest PBMs frequently excluded lower list priced insulins from their formularies, instead choosing to cover higher list price versions with large rebates. This can lead to higher out-of-pocket costs for patients with deductibles and coinsurance, who often pay cost sharing amounts tied to the list price of medicines.”

So those incessant offers from Optum and Caremark to make your life easier by shipping your meds to you direct aren’t about convenience for you. They really and truly are about increasing profits for themselves.

Thanks for Reading All This: One Last Plea

We are now in open enrollment season. You will see ad after ad on TV encouraging you to sign up for “extra benefits” with one of the insurance companies whose spokes-folks are healthy, happy, aging adults. Please, please, please don’t fall for this!  Lower monthly premiums will get you exactly what you pay for.

Yes, you can get vision coverage – but it is limited. Yes, you can get dental coverage – but it is limited. And yes, you will have low, monthly premiums that pay for limited access to fewer providers, and limited sessions, and restricted medications on the formulary. What you won’t get is choice, or a return on your investment of a lifetime of paying FICA taxes.

If you are truly healthy, then do a cost-benefit analysis. Maybe you don’t need a supplemental plan and you can afford to just go with what is already deducted from your Social Security. Or, if you don’t have Social Security, perhaps you can purchase a low-cost, bare-bones supplemental plan. Remember, open enrollment occurs yearly, so if things change, you can buy a different plan next October! As for your meds, a wonderful alternative is Mark Cuban’s Cost Plus Drug Company.

Bottom Line: Steer Clear of Medicare Advantage Plans

I value choosing who I have on my healthcare team. I want to have as much choice as possible. To achieve this, I am going with original Medicare (Part A) and not a Medicare Advantage plan.

I also want as much choice in selecting the services I need and the length of time I need those services for. I can only get this with paying for a supplemental Medicare plan or paying out of pocket. I don’t mind paying for this because I am worth it!

I appreciate the challenge of paying for supplemental coverage, be it Part B or Part D, and realize that it takes time and effort to compare plans. If you Google this, please be wary of the “compare plans” sites that are offered by the major insurance companies. They are designed to get you to sign up for their Medicare Advantage plan! Stick with Medicare.gov!

All of this may be too much for some. Please don’t fall for the “speak with a Medicare specialist today” pitch – these are independent insurance brokers, not government employees, who will guide you to Medicare Advantage plans every time. Find a knowledgeable friend or email me!  I won’t tell you what to do, but I will help you make the best choice for you!

7 responses to “It’s Open Poaching Season on Aging Adults (Hint: Medicare Open Enrollment)”

  1.  Avatar
    Anonymous

    I do not know how some get hooked into these plans.. including you at 40./hr a long while ago, and others like me do not. I have been very fortunate however to have CA Partnetship as secondary insurance or I too woud have been entrapped. The manipulation and exploitation is a product of for profit only in a pure capitalism economic system. We will cotinue to see dire consequences with out a commitment to the common good. So many are unaware and programmed to be so. Without socialized medicine it will get worse no matterr how savvy we are. Even your info was too much to take in for the average elder consumer. Great that you can offer your guidance.

  2. Berkeley Fuller-Lewis Avatar
    Berkeley Fuller-Lewis

    Mary, your blog is in no way a “rant.” It is a simple commentary on the USA’s health care “system,” SO outrageously bad that it is the (mystified) laughing stock of nearly every other “industrialized nation.” My friends in France, Germany and Japan ask: “How can Americans be so gullible?” The only answer to that is, “we’re all USED to it, as ‘normal.’”

    A very specific and personally-known case in point? Before we two (elder) military veterans discovered that we are eligible for full VA health coverage, we were “part of” the Medicare “system” (for 8 years). I recently built a spreadsheet to examine how much of our annual income had been going toward (Medicare) “health care.” Our percentage was 26% of our income each year — and that was when NEITHER OF US had any health “conditions,” whatsoever. I then asked friends in France to do the same exercise. THEY averaged only 7.4% of THEIR incomes going into their national system, and some of THEM had long-term, major, EXPENSIVE health care problems, ALL 100% covered, including drugs.

    Then I read an interesting article in the European press, which quoted ten years of United Nations studies on “health care outcomes” worldwide. For years, the (nationalized) French system has been Number One (best) in quality, whereas the USA has hovered between #24 and #26 (totally the shocking WORST).

    So, from my little personal study showed that WE Americans pay as much as 3.5 (THREE POINT FIVE) T-I-M-E-S more for health care — for results TWENTY SIX TIMES worse. So, one must ask (if one has a brain) WHERE is all that extra money going, if not to actual health care? Oh right, to The Holy Shareholders.

    Brilliant system, but only for the super rich. However, anyone who foolishly points out these FACTS is immediately called (by the propagandists for the super rich): socialists or communists. Only in America!!! (BTW, our now being in the VA program means that WE pay NO “premiums,” have no “deductibles,” and no “co-pays” (all insurance company shell-games). OUR ten years of contributing to our country were OUR so-called “premiums,” within in that superb VA (“communist”) system. How brainwashed most Americans are about all this is simply astonishing, very sad, and in fact for many, tragic. A totally unnecessary and outrageous tragedy.

  3. nan sullivan Avatar
    nan sullivan

    brilliant as usual-i am sharing your wisdom w/many; your simplicity of explanations should be adopted by all yet will unveil the trickery of this system-trickery not to be encouraged when dealing w/folks financial and health well being

  4. ELizabeth Ann Stein Avatar
    ELizabeth Ann Stein

    Nice work Mary. Your conclusion is most valuable and easy to follow. My mind gets easily wrapped up and once in the weeds I can’t find my way out.

  5. Roga Avatar
    Roga

    Joe Namath wouldn’t try to mislead me would he?

  6. Tim L Gieseke Avatar
    Tim L Gieseke

    Mary, thanks for exposing the adverse impact of well intentioned programs that have been poorly implemented. The effects have been devastating for those with mental health issues and has greatly worsened access to potentially beneficial care. I’m keeping my Medicare AARP plan F program which provides good coverage and many options for accessing optimal care. That said, even the care obtained through providers accepting this insurance, tends to still be more focused on what matters to business rather than what matters to patients and their families.

    1. Berkeley Fuller-Lewis Avatar
      Berkeley Fuller-Lewis

      Hello Tim, I can’t resist responding to you that our health care system is at worst, a deliberate scam . . . but even at best, it is merely a most feeble “compromise” with the fundamental disaster of insurance-based health “care” — such compromises expensively fashioned over the year by some “well-intentioned” politicians (usually Democrats) . . . But such folks and their efforts have been Little Dutch Boys trying to hold their fingers in the Dyke of Greed which runs the USA, which unconscionable greed which has created BY FAR the worst health care in the industrialized world. But all SO profitable (for the few).

      BTW, I helped run a private hospital for 8 years, and worked as a senior administrator in a Blue Cross/Blue Shield headquarters for another 5, before I quit . . . in NAUSEA, from having seen “the back of the house.” So the above are NOT just my “abstract opinions.”

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