Say good-bye to your Medicare Supplement?by Denise Early on Oct. 19, 2009, under Health
Medicare Advantage faces cuts because Medicare pays too much money to these private insurance plans which allow seniors to pay low or no monthly premiums and obtain extra benefits. Medicare Supplements are the next target because seniors who pay monthly premiums for these plans are costing Medicare more money than those who have not purchased a medigap plan.
Out of 43 million people on Medicare, 7 million have individual medigap plans and 14 million seniors have employer-sponsored health coverage in retirement. These retirement health plans are usually a Medicare supplement (medigap) received through a company, union, state or municipal government. Medicare pays first and the supplement pays second, and many supplement plans leave the senior with no co-payments for doctor visits, tests, hospital stays, chemotherapy, and even scooters.
This is a problem according to a June 2009 report commissioned by the Medicare Payment Advisory Commission (MedPAC). The study showed that seniors who don’t have to pay for their Medical care use the healthcare system too much, thus Medicare is paying out more money.
Through regression analysis of Medicare claims, the study determined that seniors who paid less than 5 percent of their medical bills averaged 68 to 83 percent higher total Part B spending than those who only had Medicare and no supplemental insurance. Part B of Medicare covers services such as doctor fees, lab tests, x-rays, MRI’s, CT scans, radiation therapy and chemotherapy.
The MedPAC study determined that seniors with secondary insurance to supplement their Medicare had more elective hospital admissions for things like knee replacements. According to the report “Preventive care, minor procedures and endoscopies were strongly affected by secondary insurance coverage, with substantially higher use among those with private secondary insurance”.
Beginning in June 2010, two new Medicare Supplements will be offered to try to get seniors to take on higher co-payments for their medical care. These plans will have lower monthly premiums but will not offer 100% coverage.
Plan M includes 50 percent coverage of the Part A deductible ($1,100 in 2010) and no coverage of the Part B deductible ($135 in 2010). Plan N includes 100 percent coverage of the Part A deductible but no coverage for the Part B deductible. Plan N will also require a $20 co-payment for Part B services such as doctor visits, lab tests, oxygen, and chemotherapy.
More changes are likely down the road as the Senate Finance Committee healthcare bill included proposals to create new medigap plans for C and F that include “nominal cost sharing to encourage the use of appropriate Part B physician services”. The new plans C and F would be available in 2015. Currently, Medicare Supplements C and F offer the most complete coverage for a senior, eliminating almost all medical bills because Medicare pays first and these supplements pay the balance of the bills. It looks like this type of nearly 100% coverage may not be allowed after 2015 if these changes are in the final healthcare bill this year.