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Medicare Consumer Agenda
March 12, 2009 • Volume 9, Issue 10
Giving consumers a choice of health or prescription drug plans is supposed to allow individuals to choose the coverage option that works best for them. But a new study shows that, when the Part D drug benefit started in 2006, less than 14 percent of enrollees chose one of the plans that covered their drugs at the lowest cost. The mistake cost them an additional $350 in premiums and copays.
People with Medicare say they find it overwhelming to choose from among the competing plans—most consumers have 50 drug plans to choose from —with each charging a different premium, different copays and covering different drugs. Nearly three-quarters of older adults with Medicare say Part D is too complicated.
Consumers would have a better shot at picking the right plan if we moved toward a more standardized benefit and eliminated plans that do not meet the highest quality standards—decent customer service, fair and efficient handling of appeals, screening and prevention of dangerous interactions between drugs.
But standardization alone is not enough. The Medigap supplemental market is standardized, but research shows that substantial numbers of Medigap enrollees choose coverage from companies that charge higher-than-average premiums. One reason is that if you are 65 or older, you have the right to buy a Medigap policy only at certain times (your rights are much broader in a few states). In all states, you have the right to buy a Medigap for six months beginning the month you are both 65 or older AND enroll in Part B. You are also eligible to buy a Medigap within 63 days of when you lose or end certain kinds of health coverage. Most consumers who later want to switch to another, lower-cost Medigap cannot do so. With some exceptions, insurers can subject new enrollees to medical underwriting, charging higher premiums to people with a history of serious illness. In many states, people with disabilities who are under 65 have no right to enroll in Medigap plans without medical underwriting. Consumers not only need clear information to select a plan, they also need rights to exercise that choice.
Some people also need help picking the right plan. State Health Insurance Assistance Programs (SHIPs), Area Agencies on Aging and independent consumer rights organizations like the Medicare Rights Center provide objective, unbiased information, but they don’t have nearly enough funding to meet the need. Medicare “Advantage” health plans, which pay hundreds of dollars to agents to steer consumers to their plans, should pony up more in user fees to expand unbiased counseling and educational services for people with Medicare.
Finally, people with Medicare need the option to receive all their coverage from Original Medicare. An Original Medicare option for drug coverage would provide lower cost coverage by using Medicare’s negotiating power to lower drug prices. Coverage that lowers cost sharing for medical services and caps annual out-of-pocket spending should also be available through Original Medicare. Consumers should have a better option than either Medicare Advantage or Medigap plans, both sold by insurance companies that skim 20 percent or more for marketing, claims processing and profit.
“The unprecedented privatization of a public insurance function embedded in the Medicare Part D program provides an excellent opportunity to understand how well individuals handle choice in their public insurance options. The results presented here suggest that the answer is “not very well” in terms of maximizing savings to the consumer; most seniors in this analysis did not choose the lowest-cost Part D plan available to them in 2006.” (Choosing a Medicare Part D Plan: Are Medicare Beneficiaries Choosing Low-Cost Plans?, Kaiser Family Foundation, March 2009)
“A complicating factor is that no individual has any familiarity with the Medigap market prior to turning age 65, and neither do one’s adult children, should their assistance be sought. Individuals have a relatively short window of time during which to search for and select a Medigap policy, and the one-shot nature of the market means that learning does not occur with successive purchases. An unfortunate consequence of the one-time open enrollment regulations designed to prevent adverse selection is that mistakes are not easily reversible.” (Price Variation in Markets With Homogeneous Goods: The Case of Medigap, National Bureau of Economic Research, January 2009)
“Building the capacity of SHIPs and community-based organizations to serve Medicare beneficiaries will allow improved delivery of individualized counseling services, particularly for hard-to-reach populations.” (Proposal to Restructure and Improve Counseling and Educational Services for People with Medicare, Medicare Rights Center, March 2009)
“A comprehensive Part E benefit offered by traditional Medicare would have strong advantages for beneficiaries. Beneficiaries would get the benefits they want at lower cost and with much less confusion and complexity. It would create choices for beneficiaries and a genuine choice between Medicare Extra and Medicare Advantage plans.” (Medicare Extra: A Comprehensive Benefit Option for Medicare Beneficiaries, Commonwealth Fund, October 2005)
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Medicare Part D Appeals Help for Advocates Is Here!
Medicare Rights Center’s new Medicare Part D Appeals: An advocate’s manual to navigating the Medicare private drug plan appeals process offers an easy-to-understand, comprehensive overview of the entire appeals process, including real-life case examples, a glossary of important appeals terms, a sample protocol for advocates, and links to important resources.
Register for a FREE copy of this great resource.
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Medicare Part D Monitoring Project
would like to hear about your experience, or that of someone you know, enrolled in a private drug plan. With information about what the issues are with Medicare Part D, we will be able to demand that those problems be fixed. Medicare Rights Center
Submit your story at http://www.medicarerights.org/issues-actions/tell-your-story.php.
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The Louder Our Voice, the Stronger Our Message
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Asclepios—named for the Greek and Roman god of medicine who, acclaimed for his healing abilities, was at one point the most worshipped god in Greece—is a weekly e-newsletter designed to keep you up-to-date with Medicare program and policy issues, and advance advocacy strategies to address them. Please help build awareness of key Medicare consumer issues by forwarding this action alert to your friends and encouraging them to subscribe today.
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The Medicare Rights Center is a national, nonprofit consumer service organization that works to ensure access to affordable health care for older adults and people with disabilities through counseling and advocacy, educational programs and public policy initiatives.
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