Congress must cap increasingly lethal Medicare out-of-pocket requirements
By Diane Archer and Wendell Potter
Earlier this month, “the Medicare team” inside the federal government sent an email inviting millions of us to mark our calendars for the Oct. 15 start of a 54-day period to enroll in Medicare health plans.
At the end of the email, Medicare makes a suggestion we felt should be far more prominent and noticeable, one that is akin to what the Surgeon General requires tobacco companies to plaster on a pack of cigarettes: “A plan with the lowest premium might not always provide the lowest total cost to you.”
Yes, even older adults and people with disabilities who are eligible for Medicare need to worry about high out-of-pocket costs. Whether they are in traditional Medicare, administered directly by the government, a Medicare prescription drug plan or a Medicare Advantage plan, both of which are administered by private health insurers, costs--deductibles, coinsurance and copays--have been rising. Traditional Medicare and the bewildering array of prescription drug plans have no out-of-pocket maximums, and Medicare Advantage plans have a cap that can be as high as $7,550 a year for in-network care alone. According to the Kaiser Family Foundation, millions of people with Medicare, particularly people with modest incomes in poor health, are facing cost-related barriers to care.
Many members of Congress recognize that health care costs jeopardize health care access and want the reconciliation bill to broaden Medicare benefits to include dental, hearing and vision services. As worthy as that is, capping Medicare out-of-pockets at an affordable level could be even more beneficial for cash-strapped seniors. Because there is no reasonable cap, people with Medicare too often are forced to go deep into debt to get needed care. Many others forgo this care because of the cost.
Both Traditional Medicare and Medicare Advantage cover hospital and medical care under Parts A and B. If you’ve worked and paid into Social Security, you qualify for these hospital and medical benefits at relatively low cost. But as health care costs have risen, so has the expectation that even people with Medicare need to put more “skin in the game.”
Out-of-pocket requirements encompass deductibles, coinsurance and copayments. Deductibles for Medicare hospital and medical coverage are relatively low compared to what workers with private insurance pay these days. Coinsurance is an entirely different story: Traditional Medicare only covers 80 percent of its approved rate for medical services. That means people with Medicare, whose average annual income is less than $30,000, can face thousands of dollars in additional medical bills unless they can afford supplemental coverage, which picks up those costs and protects them financially.
Medicare Advantage (Part C), the alternative to Traditional Medicare, claims to fill that void, offering an out-of-pocket cap for medical and hospital services and additional benefits. Many Medicare Advantage plans even offer $0 monthly premiums. What could be more enticing to people on retirement incomes?
The devil is in the details. Medicare Advantage plans drive profits for their corporate parents by charging high and often sudden out-of-pocket coststhat are tied to sickness. These costs are often prohibitive, leading people to skip critical care or, as the GAO found in a recent study, disenroll from their Medicare Advantage plans and return to Traditional Medicare when they get sicker.
Insurers profit at taxpayer expense when that happens. Not only can Medicare Advantage plans consequently avoid covering expensive care, but they can also benefit from the upfront payments the government pays them that they don’t spend. Uncle Sam’s generosity to health insurers explains why many of them are reporting record profits. Many now get most of their revenues from the government, not from private paying customers. UnitedHealthcare, the biggest Medicare Advantage insurer, makes more than twice as much from government programs like Medicare Advantage and Medicaid as it does from its commercial customers.
Medicare Part D prescription drug coverage also needs a reasonable out-of-pocket cap. One recent study found that when prescription cost-sharing rose as little as $10.40, it increased mortality by nearly 33 percent among the more than 20 percent who stopped taking their medications because of the additional cost.
To put it more bluntly, many of our parents and grandparents are dying because they have no more skin to put in the game.
People with Medicare find themselves with formidable health care costs wherever they turn, taking a bigger chunk of their retirement income with each passing year or, worse still, precluding them from getting care. This untenable situation is a key reason that a variety of groups, including several passionate about the health care needs of seniors, have come together to demand that Congress address rising out-of-pocket health care costs.
Congress is now neck deep in drafting legislation that could easily rein in out-of-pocket costs for everyone with Medicare at no or little additional cost. Medicare Advantage plans are currently receiving rebates of $140 a month per enrollee and at least $40 a month more per enrollee than traditional Medicare in government overpayments. Lawmakers could allocate some of those funds towards lower out-of-pocket costs and a low out-of-pocket cap in both Traditional Medicare and Medicare Advantage.
Consider that this week, millions of seniors and people with disabilities will stare blankly at an online Medicare enrollment portal, faced with health care out-of-pocket cost projections that for many will be far too costly. Instead of allowing corporate health insurers to grow fat on Medicare, our leaders should direct that money toward lower costs for the most vulnerable among us.
Diane Archer is the president of Just Care USA, an online hub for Medicare and other health care information, and the founder of the Medicare Rights Center. Diane and I got to know each other in 2009 when we both were advocating for what became the Affordable Care Act. We spent many days on Capitol Hill talking to anyone who would listen about the importance of creating a “robust” public option to, as President Obama said, “keep health insurers honest.” We lost that battle but soldier on for reform, including improving and expanding Traditional Medicare.