Medicare payments to doctors are currently under threat because the two parties in Congress cannot agree on how to avoid an “automatic” cut in payments even though neither side claims to actually want the cuts to go into effect. The deadlock is usually described as a conflict between the interests of poor sick people, represented by Democrats who want to cut funding for the semi-private Medicare Advantage program, and the interests of insurance companies, represented by Republicans who want to cut benefits to Medicare recipients. If the situation were really that simple, I, a low-income, disabled Medicare beneficiary would have no trouble whatsoever deciding which side to be on: I don't want to lose my benefits! In addition, I am a long-time Democrat and am in favor of a government-managed single-payer system of health care. I have lived in France, which has a national health system, and have friends in England and Canada which each have somewhat different single-payer systems. I have seen the advantages of these systems first-hand.
I offer this account of my own experience choosing a Medicare health plan, complete with the boring and confusing details, in order to show that the decision facing Congress regarding Medicare funding is a complex question requiring analysis of the details of costs and benefits to (different groups of) recipients. It is not, as most commentators seem to think, fundamentally an ideological issue involving a choice between public and privatized models of care, or between serving taxpayers or poor people.
After carefully researching my options, I chose to enroll in a Medicare Advantage program. So far my experience has been mostly positive (as is not the case for everyone who signed up for a Medicare Advantage plan) and I have paid less for my health care than I would have using other options (Original Medicare + Part D, Medigap, etc.). The decision was very specific to my particular health needs, the other benefits I receive, my income, and the likelihood that I will need medical care away from my primary residence.
I first became eligible for Medicare in 2006, soon after the new Medicare legislation which introduced prescription drug plans (“Medicare Part D”) came into effect. At that point, I was already a New York State Medicaid recipient because of disability and low income. As such, I belong to the poorest, most medically needy group of Medicare recipients, known as “dual-eligibles,” because we get coverage both from Medicaid (mostly a program for the poor) and Medicare (mostly for the elderly and disabled).
Under the new legislation, dual-eligibles and other needy Medicare recipients are eligible for “Special Help” with the out-of-pocket health care costs associated with Medicare, including the new drug coverage. At the same time, we lost our Medicaid drug coverage which covered almost 100% of virtually any prescription medication. The loss of Medicaid drug coverage created numerous problems for dual-eligibles, which were widely reported when the new law came into effect. Ultimately, most states spent a lot of money paying for drugs which should have been covered by Medicare Part D for their poorest citizens.
Depending on one's level of need, “Special Help” pays some or all of one's Medicare Part B premium (for inpatient care), subsidizes drug co-payments under Part D, and eliminates the “donut hole” gap in Part D coverage in which patients are responsible for 100% of their drug costs once they have spent a certain amount each year, until they reach a higher annual threshold above which Part D covers the full cost of medications. People who receive the “Special Help” are also exempt from rules which impose penalties on people who sign up late for Part D and which restrict one's ability to switch plans to a short period once a year.
The new legislation also created the Medicare Advantage programs, in which private insurance companies are paid by Medicare to provide a health plan including prescription coverage for Medicare recipients. These plans can differ from original Medicare in co-payments, deductibles, covered services, and the formulary of covered medications, and they may charge an additional (usually small) monthly premium to cover services not provided by Original Medicare. (Medicare Advantage programs often include dental, vision, and fitness benefits not covered under Original Medicare.) These premiums are reduced for Medicare recipients receiving “Special Help.”
When I qualified for Medicare, I had to make a quick decision about a drug plan because I have a severe, chronic illness, requiring many medications, and I was about to lose my Medicaid drug coverage. I went to New York State's website for Medicare recipients (http://www.ins.state.ny.us/caremain.htm) to see the list of approved plans and check if my medications would be covered under each available plan. At that point I discovered that I had the choice whether to get a Part D plan to add to Medicare and Medicaid or a Medicare Advantage Plan which covers both medical services and drugs. I used the federal government's web-based tool for comparing Medicare plans (http://www.medicare.gov/MPPF/Include/DataSection/Questions/Welcome.asp), which is helpful but is also very slow (it took 10 minutes to get my results after I answered all the questions, and I did not do the most detailed kind of search). The information on the Federal Medicare site is also not completely accurate with respect to dual-eligibles, because some figures take the “Special Help” into account and others give the cost without subsidies.
My research revealed that I could easily rack up large medical bills which I could never pay if I did not choose a Medicare Advantage plan. In particular, under Original Medicare, each hospitalization carries a co-payment of over $900 regardless of its length. Many other services require patients to pay 20% of the approved Medicare cost of the service, which can be enormous in the case of specialists or expensive tests. While many of my medical expenses would still be covered under Medicaid, many others would not. In particular, almost no private doctors take Medicaid. Medicaid recipients therefore must use hospital clinics or health centers where the care is impersonal and often incompetent, and they usually wait all day to be seen, even with a so-called “appointment.” Also, Medicaid is a state-administered program (partially funded by the federal government through block grants). As such, New York State Medicaid recipients get no coverage outside the State of New York.
Because I expected to need many medical services, I spent less on medical care (despite the additional monthly premiums) by enrolling in a Medicare Advantage program than I would have under Original Medicare, plus a Part D plan. I chose a PPO, a kind of plan in which there is a network of “preferred providers” for whom the insurance gives better coverage, but where some reimbursement is provided for any doctor or hospital. In a PPO, (by contrast with an HMO), patients do not need prior approval to see a specialist or to get tests. I did not want to be in an HMO because my primary disabling illness is treated by a specialist and having to go through a primary care doctor each time I need treatment is a huge burden and is very expensive for both me and the government: The gate-keeper system essentially means having an extra, medically useless, appointment each time I need to see the doctor who actually treats my condition. Another problem (for me) with HMOs is that I split my time between two cities, and HMOs require one to get all medical care within a local network of hospitals and doctors, except in emergencies.
Rather than controlling costs, HMOs actually add to the expense of treating patients who have serious illnesses requiring specialist care. When I have not had easy access to specialists, I have ended up with numerous emergency room visits and some unnecessary inpatient stays because primary care doctors cannot recognize when I am in danger of a serious flare-up, requiring tests, medication changes, or emergency procedures. This is another instance in which an idea which sounds reasonable on its face (“costs can be controlled by coordinating patient care through a primary care doctor”) actually has the opposite of the intended effect. Proponents of managed care suggest that if allowed to seek out specialist care and tests on their own, patients will get an MRI every time they have a headache, but I have rarely seen this kind of thing happen in real life. Medical tests and doctors' visits are generally unpleasant, and people do not want unnecessary procedures. Nor do they unreasonably insist on seeing specialists for problems that can easily be handled by a general practitioner.
A much more common compliant is that patients go to a GP for seemingly simple problems and end up with a handful of referrals to specialists for issues that family doctors used to treat routinely. By turning the primary care doctor into a gate-keeper whose main role is to refer or deny care, managed care has actually reduced the amount of medical care that family doctors provide. Anyone over 35 who remembers the era before HMOs will recall that the family doctor used to cut off moles, treat diabetes and heart disease, and stitch up wounds in the office. Now all of these routine medical problems are referred to specialists or emergency rooms, multiplying the cost of care and delaying treatment.
To choose which PPO to enroll in, I had to go to each plan's website to download the formulary (list of covered medications), the list of network providers, and the “Summary of Benefits,” which lists the co-payments, deductibles, and maximum out-of-pocket medical cost for each kind of service. Out of forty-six plans available in my area, I only had to look at the details for three plans because all the rest could be ruled out once I eliminated HMOs and plans which did not cover my doctors, hospitals, or medicines. The work required to get all this information (and the fact that it would be virtually impossible to make a good decision without internet access and computer skills) is one of the really bad things about the new Medicare options.
By definition, most Medicare recipients are old and sick, and the differences between plans hurt the poorest and sickest most. Many of these people are in nursing homes where they have no access to the necessary information, and many are too disabled to make a good decision. While the new law did recognize that dual-eligibles, the most vulnerable Medicare recipients, might have trouble choosing plans and that they would have bad problems if they lose their Medicaid drug coverage without having a Medicare drug plan, it handled this in the worst possible way: The new law randomly assigns dual-eligibles to the lower-premium Part D programs available in their area, specifically prohibiting states or municipalities from developing sensible ways to choose drug plans for dual-eligibles who do not sign up on their own. (The right way to assign recipients to plans would take into account the recipients' medications, doctors, and the amount of medical services they use, and would allow them to be assigned to higher-premium programs if they would be more cost-effective.)
The monthly premiums for my first Medicare Advantage plan were very low ($11.60 / month with the “Special Help” subsidy), and the plan turned out to be easy to use. I was able to see private doctors for the first time in many years. As it happened, I fell ill while on what was supposed to be a two-day trip to Boston in the very first month that I had the new plan, and I ended up with three inpatient stays in Boston before I was able to come home to New York. As a result, the Medicare Advantage plan paid for over $3000 of hospital, ER, and ambulance fees which I would have had to pay out-of-pocket had I stuck with Original Medicare (because NYS Medicaid is useless in Massachusetts).
Luckier than many dual eligibles, I had no problems getting my new plan to pay for my medications, and I ended up with far better health coverage on Medicare Advantage and Medicaid than I had on just Medicaid, and fewer out-of-pocket medical expenses than I would have had on Original Medicare combined with Medicaid. The next year, facing cost overruns and criticism that Medicare Advantage programs were a gift to insurance companies (along with legitimate complaints about some fly-by-night Medicare Advantage programs that cheated consumers), Congress reduced funding for Medicare Advantage. My plan's name changed, the premiums were doubled, and co-payments went up significantly. However, the plan remained an overall benefit. Having just moved to a different county, I recently signed up for my third Medicare Advantage program, and again, the premiums are higher. This time the other out-of-pocket costs are lower so I may not end up worse off than I was, but that will depend on exactly what services and drugs I need. I have yet to discover whether the new insurance will work as advertised, but in light of my past positive experience, I expect it will be okay ... unless Congress further reduces funding to Medicare Advantage programs, in which case I will surely suffer.
While I am generally satisfied with my Medicare Advantage plan, I am still not sure how the question before Congress on Medicare funding should be decided. I will also be harmed if payments to doctors are reduced, because doctors will be increasingly unwilling to participate in Medicare. On a policy level, the decision is harder than deciding what is best for me, because different Medicare recipients are affected differently. For example, someone with fewer medical needs would be better off with Original Medicare than with a Medicare Advantage program, and someone with a higher income would get worse coverage at a higher cost, because they would not have “Special Help.”
In addition to balancing the needs of specific groups of Medicare recipients, Congress must also consider the effect of Medicare on taxpayers, federal and state budgets, the medical system, and on the economy as a whole. I do not presume to know what is best when all factors are taken into account, but I do know that the decision is a lot more complex than free market economics versus the nanny state. I am convinced that a better decision will be made if legislators focus more on the practical consequences of what they do and less on the ideological implications.