Medicare Disadvantage: Private Insurance Behaving Badly

One thing most people can agree on about America's healthcare delivery system is that it is confusing. Take the alphabet of Medicare services for example. Part C, Medicare Advantage, is actually extra health insurance coverage offered by private insurance companies. Six of these plans have recently been accused of breaking insurance marketing rules in ways that may have placed seniors at risk says the Inspector General of the US Department of Health and Human Services.

The health insurance companies singled out for behaving badly include Aetna, Universal American Corporation, Freedom Heath Plans in Florida, MD Care in California, Blue Cross and Blue Shield of South Carolina, and Sterling Insurance. Accusations of rule breaking include:

• Paying sales agents incentives that might steer seniors into the wrong plans
• Using unqualified or unlicensed sales agents
• Having sales agents pretend to be from Medicare and misleading seniors about plan benefits

These same plans have been in trouble in the past, but they are not alone. According to the American Medical Association (AMA), reports of deceptive marketing practices in Medicare Advantage are widespread. The report from the Inspector General's office says that although these six companies have been singled out, there is no reason to suspect their behavior is much different from the other 260 companies that offer Medicare Advantage.

Medicare Advantage and Healthcare Reform

It is almost impossible to separate out the truth from the politics of healthcare reform. We do know that the new plan phases out government subsidies that go to Medicare Advantage. Depending on which side of the argument you’re hearing, that will result in billions of dollars cut from seniors' Medicare benefits or it will extend the life of Medicare and cut wasteful spending. Here are some truths:

• About 25 percent of people on Medicare are enrolled in a Medicare Advantage plan.
• Medicare Advantage plans do offer extra services such as vision, hearing, dental and wellness coverage.
• In addition to out of pocket expenses paid by the enrolled senior, Medicare Advantage also receives a government subsidy of about $135 per month.
• Seniors who have traditional Medicare all pay more into their Medicare Part B to help pay for these subsidies.
• If nothing were done to save money, the Medicare Trust Fund would be depleted by 2017. Cutting Medicare Advantage subsidies will save money and may extend the life of this fund.
• Cutting these subsidies may cause private health insurance companies to raise premiums or cut benefits to people who want Medicare Advantage.

Tips for Seniors and Caregivers on Medicare Advantage and Healthcare Reform

Take a deep breath—there is good news. The AMA, AARP and the National Academy of Elder Law Attorneys (NAELA) all support the new healthcare reform package. Though it will take time to see all the benefits of changes to the healthcare system, nobody is coming to take away your doctor. Also keep in mind:

• Changing enrollment for Medicare Advantage is closed until next year. If you are concerned that you have been enrolled in a Medicare Advantage plan under false pretenses you can contact the Centers for Medicare and Medicaid Services.
• You probably don't want to make any decisions or form opinions based on what certain politicians or news shows tell you. Don't be scared or angry—be educated. Here are some resources you can use to get information on how the new healthcare bill might affect you and your family: