Private Medicare Plans Too Costly Congress Told

Private Medicare Plans Too Costly Congress Told

Private Medicare Advantage health plans cost too much and are forcing the government and seniors to pay more than they would for traditional Medicare, Congress was recently told.  Lawmakers are taking a closer look at the plans and considering shaving some of the excess costs.

In the first of several hearings on Medicare Advantage plans, Representative Pete Stark (CA), Chairman of the House Ways and Means Subcommittee on Health said that when the private managed plans began 25 years ago they were supposed to be "better and cheaper than the government."  Indeed, millions of beneficiaries, about one out of every five, have flocked to these private Medicare plans which often entice seniors with low or even zero premiums.  Some plans offer added benefits not covered under traditional Medicare like vision and dental care.

But for some, the private plans come with risks, says a report from the Medicare Rights Center (MRC).  "When people enroll in these plans, they don't always understand the details, such as how much they will pay for visits to doctors outside their plan's network, for hospital stays or expensive treatments such as chemotherapy.  People in private Medicare health plans do not discover their plans' restrictions and hidden costs until they are enrolled and get sick," says Deane Beebe of MRC.

In recent weeks at least three independent, nonpartisan advisory groups, the Medicare Payment Advisory Commission, the Congressional Budget Office and Medicare's own actuaries have reported that the government pays private plans on average 12% more per beneficiary than it spends on seniors covered by traditional Medicare.  At a hearing attended by TSCL Legislative Assistant, Jamie McMillen, Medicare's chief actuary told Congressman Stark's subcommittee that if payments to the private plans equaled those in traditional Medicare, the system's finances would improve and (all) beneficiaries would pay less.

TSCL expects that legislation will be introduced in the House soon to bring payments to Medicare Advantage plans more in line with those of traditional Medicare.

Tell us what you think!  Are you in a Medicare HMO?  Do you save money, or does the plan cost you more than you thought it would?  Should private Medicare Advantage managed care plans get paid more than traditional Medicare?  Send your story and comments.

Source:  "With Focus On Medicare Bottom Line And Benefits, Cuts To Private Plans Eyed," Alex Wayne, Congressional Quarterly Today, April 25, 2007.  "Unexpected Costs And Obstacles Are Common For Americans Enrolled In Medicare Private Plans," Medicare Rights Center, April 25, 2007.