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Trends
in private Medicare+Choice plans provide warnings for Medicare debate
EurekAlert
June 25, 2003
New
York -As Congress debates Medicare proposals that would shift more
beneficiaries into private insurance plans, legislators may first want to
examine the often tumultuous history of the six-year-old Medicare+Choice
program, Medicare's managed care alternative to its traditional
fee-for-service program. According to a new policy brief from The
Commonwealth Fund, many Medicare+Choice enrollees have been faced with a
limited choice of plans in their area and instability in provider
participation compared with fee-for-service Medicare, as well as
significantly increased out-of-pocket costs--especially for those with
chronic and disabling illnesses--and a confusing, complicated benefit
structure. "Seniors may
suddenly find that their physician is no longer a member of their plan or,
if they have health problems, that their out-of-pocket costs have increased
substantially," said Karen Davis, president of The Commonwealth Fund.
"These are the realities of the health care marketplace, and we should
be cautious about inflicting them on the elderly and disabled." The analysis, Lessons
from Medicare+Choice for Medicare Reform, by Geraldine Dallek, an
independent health policy consultant, and Brian Biles and Lauren Hersch
Nicholas of George Washington University, provides seven lessons for the
current debate: Lesson #1:
Private plans do not participate in many regions. Attracting private plans
to some regions, particularly rural areas, has been difficult because of the
small number of hospitals and physicians in these areas and their reluctance
to contract with managed care plans. Only 13% of rural beneficiaries have an
option of joining a Medicare+Choice plan. Lesson #2:
Premiums and benefits vary greatly by geographic area. Wide variation in
premiums, benefits, and cost-sharing will undermine the promise of Medicare
to provide the same health care benefits to beneficiaries no matter where
they live. Enrollment-weighted average monthly premiums in Medicare+Choice
plans ranged from $3 in New York City to $87 in neighboring Long Island in
2002. Lesson #3:
Participation by Medicare HMOs has been unstable. Because Medicare+Choice
payments to participating plans are related to overall growth in traditional
Medicare costs, rate increases have been limited in recent years, generally
to 2 percent annually. With continued participation in the Medicare market
less financially attractive, plans have reduced their service area or simply
withdrawn from local markets altogether, disrupting health care for more
than 2.4 million beneficiaries from 1999 to 2003. Any new Medicare program
that depends on private plans is likely to face the same circumstances. Lesson #4:
Physician and hospital participation has been unstable. Medicare+Choice
enrollees have experienced high rates of turnover in the physicians and
hospitals that participate in their plans. Statewide primary care provider
turnover rates ran as high as 33 percent in New Mexico in 2001. Nine of 36
states had Medicare+Choice primary care turnover rates of 20 percent or
more, including plans in large states such as Florida, Illinois, and Texas. Lesson #5:
Medicare+Choice options are too complicated for many beneficiaries. Although
choice of health plans is the cornerstone of competition in the private
marketplace, the complicated range of choices in Medicare+Choice benefits
and cost-sharing make it difficult for anyone--let alone elderly people with
cognitive impairments--to make an informed choice. Medicare+Choice plans do
not provide standardized benefit packages, so beneficiaries must choose
between plans with wide variation in the benefits offered, including
prescription drug coverage. Plans can differ greatly in the level of drug
benefits provided, coverage of brand names or generics, copayments, and
method of determining drug costs that count toward benefit limits. Lesson #6:
Medicare+Choice plan design can discourage enrollment by high-risk
beneficiaries. Medicare+Choice plans have historically enrolled healthier,
lower-cost individuals than traditional fee-for-service Medicare. Moreover,
private insurers increasingly show an interest in risk selection,
encouraging enrollment by healthier beneficiaries. In particular, increases
in cost-sharing for some services by some plans seem to be directly related
to the fear of enrolling high-cost beneficiaries. Across the nation, plans
have increased costs on specific services most likely to be used by
enrollees with high-cost chronic conditions, such as hospital care, oxygen,
dialysis, chemotherapy, and radiation therapy. Lesson #7:
Private plans are not less costly than traditional Medicare. While a major
goal of private plans is to control growth in costs, the Medicare+Choice
experience shows that private plans can increase program costs. Among the
reasons are Medicare's need to increase payments to attract private plans in
rural areas, as well as the higher administrative costs for Medicare+Choice
compared with fee-for-service Medicare. It is difficult for private plans to
offer additional benefits, cover marketing and administrative costs, and
make a profit while at the same time pricing their products below the costs
of traditional Medicare. Out-of-Pocket Spending
for Medicare+Choice Beneficiaries in Poor Health Varies Considerably, 2002:
Seven Sites. Copyright ©
2002 Global Action on Aging
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