Academic journal article Care Management Journals

Informed Choice: The Case for Standardizing and Simplifying Medicare Private Health Plans

Academic journal article Care Management Journals

Informed Choice: The Case for Standardizing and Simplifying Medicare Private Health Plans

Article excerpt

California Health Advocates (CHA) is a nonprofi t organization dedicated to timely and responsive education and advocacy efforts on behalf of California Medicare benefi - ciaries and the preretirement population. Medicare Rights Center (MRC) is the nation's largest independent source of Medicare information and assistance for people with Medicare. Founded in 1989, MRC helps older adults and people with disabilities get high-quality, affordable health care.

EXECUTIVE SUMMARY

This report posits that people with Medicare would be better able to make informed decisions about their coverage options and be more likely to receive protection against high out-of-pocket spending on health care if Medicare private health plans-so-called Medicare Advantage plans-were only allowed to offer a fi nite number of standardized benefi t packages.

There is a marked difference between choosing among competing private Medicare health plans and selecting a supplemental "Medigap" policy. (Medigap policies are sold by private insurers and receive no government subsidy. They cover gaps, such as deductibles and coinsurance, in the standard Medicare benefi t.) There are a limited number of Medigap benefi t packages, all of which provide fi nancial protection against catastrophic illness. By contrast, there is no limit on the variety of benefi t designs employed by Medicare private health plans and no guarantee of protection against exorbitant medical bills.

Combining a review of recent research with an examination of the benefi t packages offered to people with Medicare in 2007, the report demonstrates that there are serious defi ciencies in the benefi t packages of Medicare private health plans. Among the shortcomings detailed in the report:

* Consumers suffering from chronic illness can incur widely varying levels of cost-sharing under different plans.

* Many plans do not provide a limit on enrollees' annual outof- pocket spending for medical services, or they exempt certain services, such as chemotherapy, from such limits;

* Many plans charge more than Original Medicare for specifi c services, such as inpatient hospital care, nursing home stays, or home health care.

The report fi nds that the current marketplace for Medicare private health plans, which is characterized by an increasing number of plans with widely varying benefi t designs, makes it nearly impossible for consumers to discover the shortcomings in plans' benefi t design. Informed choice is made more diffi cult by the aggressive marketing of Medicare private health plans and an overreliance by consumers on the information supplied by agents and brokers with a fi nancial interest in pushing specifi c plans. Only a fraction of consumers utilize Web-based plan comparison tools or advice from trained counselors in the State Health Insurance Assistance Program in selecting plans.

Today's marketplace for Medicare private health plans bears marked similarities to the marketplace for Medigap plans before Congressional action mandated the standardization of these plans, a reform that successfully enhanced consumers' understanding of their plan options and decreased the incidence of deceptive and abusive marketing. The regulatory structure for Medicare private health plans fails to prohibit benefi t designs that are disadvantageous to individuals with serious illnesses and does not provide consumers with the means for making an informed choice of plans. Drawing from its prior experience regulating Medigap plans, Congress should create a process to develop a limited number of benefi t packages for Medicare private health plans that meet minimum standards of consumer protection.

INTRODUCTION

Enrollment in Medicare private health plans has risen by over three million since 2003, with the fastest increase concentrated among private fee-for-service (PFFS) plans that are marketed as low- or zero-premium alternatives to supplemental Medigap plans. …

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