Medicare Advantage PlansPosted on:3/24/2006
|The Medicare Modernization Act improves compensation and business practices for insurers to offer programs to compete against Medicare. |
The Medicare Modernization Act improves compensation and business practices for insurers to offer programs to compete against Medicare. For the last 20 years, the Federal government has been trying to encourage private health insurance competition with Medicare to realize some of the cost savings that come from commercial competition and privatization. Initial plans, generally called Medicare + Choice, were established by several major health care insurers including Humana, Aetna, and the Blue Cross/Blue Shield plans. The initial plans were organized along traditional HMO (Health Maintenance Organization) business plans but they lacked the ability to truly manage care, as patients could freely switch back to traditional Medicare insurance. Most of the plans quickly cut back their service areas and stopped enrolling new patients. With the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, new Medicare Advantage plans were established with several advantages over the previous Medicare + Choice plans:
1) enrollees sign on for a whole year
2) care can be restricted to networks of providers
3) formularies can be used to restrict prescription drug choices
4) prescription coverage can be deferred to the patient or a Medicare Part D prescription plan
5) care other than emergency care can be restricted to a particular region
6) federal reimbursement can be adjusted according to the health risk of the enrollees
The attraction for health insurers is the incredible difference between normal healthcare premiums and the federal Medicare premium. Normal health insurance premiums (for someone working or healthy enough to be allowed to enroll) are generally $150 to $350 a month, depending on the level of service desired, health status, and deductibles. For a Medicare eligible enrollee, the health insurer can receive around $800 a month, more than double the premium for younger, healthier citizens. These plans are being aggressively marketed. Among other benefits, the senior gets an immediate financial boost, as many plans let them skip paying Part B and Part D premiums, waive usual deductibles, and waive copays, all while covering preventive physicals and providing a prescription drug benefit. While the insurance plan can realize immense initial profits, every single Medicare enrollee, no matter their underlying health status, can be expected to undergo between 1 and 6 life threatening major illnesses before they die. The pathology and illnesses associated with aging are innumerable and ultimately unbeatable. A comparable insurance concept would be a comprehensive policy for newly diagnosed advanced cancer patients. The ultimate economic viability of a Medicare Advantage plan will not be known for 10 to 15 years. For seniors, the initial cost savings is balanced against insurance companies’ healthcare rationing through restrictive prescription drug formularies, requiring documentation of medical necessity for imaging studies such as CT scans and MRIs, decreasing physician access, and rationing of lab tests, and ancillary care.
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