- While officials claim to not be pivoting patients to private plans, the subject lines of recent emails appear to suggest differently, according to a report by Robert Pear in The New York Times.
With the open enrollment period for the plan ending last Friday, federal officials predict that almost 37 percent of the 60 million Medicare beneficiaries will be in Medicare Advantage plans that by next year, a 28-percent increase over five years ago.
“Get more benefits for your money,” said an October 25 message to consumers. “See if you can save money with Medicare Advantage,” said another only days later.
The messages — “paid for by the U.S. Department of Health and Human Services” — urge beneficiaries to “check out Medicare Advantage.” To compare different options, they point to an online Medicare plan finder.
“You may be able to lower your out-of-pocket costs while getting extra benefits, like vision, hearing, dental and prescription coverage,” said another email to beneficiaries.
In small print, the emails say they were “created and distributed by the Centers for Medicare and Medicaid Services” to people who “signed up for email updates from the Medicare team.”
However, the agency’s not favoring private plans over the original government-run Medicare program, insisted CMS Administrator Seema Verma.
Former CMS Chief Actuary Richard Foster isn’t persuaded. The emails sounded “more like Medicare Advantage plan advertising than objective information from a public agency.”
“The statements made in the emails are generally accurate, but they are one-sided,” Foster said. “The advantages of M.A. plans are emphasized, while the disadvantages aren’t mentioned.”
Case in point, private plans generally require beneficiaries to use a defined network of health care providers or pay more for care outside the network he noted. By contrast, in traditional Medicare beneficiaries can go to any doctor who accepts Medicare as most doctors do.
Doubling down on Foster’s contention was Jo Murphy who, as the director of Michigan’s State Health Insurance Assistance Program, has counseled thousands of Medicare beneficiaries. “It seems that there are a whole lot of promotional emails coming from the federal government. There does seem to be encouragement to go to Medicare Advantage, part of a trend favoring private companies over traditional Medicare, for whatever reason.”
In any event, The Congressional Budget Office estimated that in the coming decade, federal spending on Medicare Advantage will nearly triple, to $584 billion in 2028, from $210 billion this year.
Insurance executives and investors also are high on the prospects for the private Medicare plans. Companies like UnitedHealth and Humana offer the plans, which market extensively themselves this time of year.
According to a report in Forbes, many new Medicare Advantage health plans are expected to draw a larger pool of seniors attracted to lower premiums, expanded benefits, and additional choices for 2019. Large insurers like UnitedHealth Group, Aetna, Cigna, Humana, and Anthem were selling in new markets and additional counties when open enrollment started in October for coverage that begins in 2019. It’s expected to increase the number of seniors enrolled in privately-administered Medicare Advantage plans for 2019 to more than 22 million.
The number of Medicare Advantage plan choices will increase by nearly 20%. “More than 91% of people with Medicare will have access to 10 or more Medicare Advantage plans in 2019, compared to nearly 86 percent in 2018,” CMS said.
UnitedHealth Group, the nation’s largest health insurer, is expanding its individual Medicare plan offerings to 130 more counties in 2019 and entering Minnesota this year. All told, for 2019, it will offer Medicare Advantage plans in 47 states and the District of Columbia. Meantime, Humana will expand HMO offerings into 97 new counties and PPO plans in 352 new counties for next year.
Medicare Advantage enrollment will rise to 38 million — or 50-percent market penetration — by the end of 2025, according to a report last year from LEK Consulting. Currently, just under 35% of Medicare beneficiaries; or about 20 million Americans, are enrolled in MA plans.
Robert Berenson, a Medicare expert with the non-partisan Urban Institute, told USA Today that with about 10,000 baby boomers aging into Medicare range each day, the general view of the insurance industry “is that their future is Medicare, and it’s crazy not to pursue Medicare enrollees more actively.”
For-profit Medicare Advantage insurers made a five-percent profit margin in 2016 — twice the average of Medicare plans overall, according to the Medicare Payment Advisory Commission, which reports to Congress. That’s slightly better than the health insurance industry’s overall four-percent margin reported by Standard & Poor’s. Those profit margins could expand. The Trump administration boosted payments to Medicare Advantage plans by 3.4 percent for 2019. That’s 0.45 percentage points higher than the 2018 increase.
However, Medicare beneficiaries might be leaning to private plans—even without a nudge from the government.
Many people have become accustomed to managed care plans through their employment. When they reach age 65, they’re comfortable opting for a private plan — in fact, in some cases, a Medicare Advantage plan offered by the same company that provided their employer-based coverage.
Patricia Neuman and Gretchen Jacobson of the Kaiser Family Foundation noted other possible attractions in a piece they authored a few days ago in The New England Journal of Medicine.
For one, Medicare Advantage plans offer a variety of extra benefits such as dental care and gym memberships. Private plans protect against catastrophic health care costs, with an annual limit on out-of-pocket spending for doctors’ services and hospital care. On top of that, private plans “offer the convenience of one-stop shopping for all their coverage,” they continued.
By comparison, typical beneficiaries in traditional Medicare pay one premium for coverage of doctors’ services, another premium for drug coverage and often a third premium for supplemental insurance such as a Medigap policy or a retiree health plan.
While private plans boast of providing superior-quality care, it remains to be seen whether evidence will bear out the touted benefits of Medicare Advantage over traditional programs.