More Granite Staters signing up for managed care plans

Most people think of Medicare as a government program. That’s still mainly true, but it increasingly doesn’t seem like it will be for long.

Of course, the government will still be the “single payer,” as envisioned by advocates of Medicare for All. But what was not originally envisioned is private insurers, drug companies and other private entities getting the money and increasingly running the show.

Already, 42 percent of Medicare recipients nationwide are in Medicare Advantage plans, meaning they are taking part in some kind of managed care plan, and their medical decisions are limited by a private insurer. So far, New Hampshire Medicare recipients have not been as eager to sign up, but they are catching up fast.

There were more than 317,000 Medicare beneficiaries in the Granite State as of September, according to the Centers for Medicare & Medicaid Services (CMS).

Some 83,000 — about 26.2 percent — were enrolled in Medicare Advantage plans, up from 8.4 percent five years ago. And that’s before the current enrollment window, which closes Dec. 7, opened in October.

Most expect further growth in Medicare Advantage enrollment, since traditional Medicare premiums just jumped by nearly 15 percent. But while most Medicare Advantage plans have no premiums and offer “perks” not covered by traditional Medicare, if you read the not-so-fine print — and there is a lot of it — there are some hefty deductibles and little coverage outside the network.

All of this is subsidized by a complicated payment system that increasingly favors Medicare Advantage, to the point where government watchdogs have proposed cutting some of those payments so Medicare doesn’t run out of money.

Even the 234,000 state residents on traditional fee-for-service Medicare deal with private insurers. More than two-thirds (159,000) pay for a Medicare prescription plan and 41 percent (98,000) pay insurers for supplemental coverage, commonly known as Medigap insurance.

Aside from economic pressures — and a Medicare Advantage advertising blitz featuring aging celebrities like 78-year-old former Jets quarterback Joe Namath — the shift to the privately controlled plans is being aided by the government itself. It subtly promotes Advantage plans in its materials and by allowing people to automatically sign up for group Medicare Advantage plans.

In addition, private investors have joined the effort to move people on traditional Medicare into a less restrictive managed care plan by making deals with medical practices to pay them more money to take more risks.

One such company, now owned by Walgreens, has been operating such a program in Derry since April.

Shifting landscape

How is this happening? How did current and future Medicare recipients become a target for major health conglomerates like United Healthcare, Anthem, CVS, and how is that playing out in the state?

Part of it is the shifting landscape of healthcare itself. When Medicare began, as part of the Great Society programs of the 1960s, it was mainly for hospital care because, back then, paying for a doctor wasn’t such a big deal. But as the cost of care increased and shifted outside the hospital, so did Medicare.

“Think of it as an old house with a lot of add-ons,” said Ray White, an insurance broker in Bedford who himself shifted to writing Medicare coverage as he and his clients aged.

Outpatient coverage (Part B) was like an afterthought, a covered porch until it became more prominent in the late 1970s and 1980s. Medigap started in the 1990s, and prescription drug coverage (Part D) was passed by Congress in 2006.

When it was first introduced in the 1980s, Medicare Advantage — Part C for “Medicare Choice” — wasn’t an add-on but an alternative. It offered all the other parts put together, and some more.

“Cheaper,” said White, “but not necessarily better.”

The choice it represented was different coverage and networks. Most traditional Medicare subscribers wanted the choice to go to any doctor and get nearly any procedure they wanted.

“Traditional Medicare is the kind of insurance that doesn’t exist anywhere anymore,” said White. “Go where you want to go, do what you want to do: no referral, no permission, good old-fashioned coverage, the Holy Grail of insurance.”

White said his commission on MA plans is two or three times than that of Medigap, although he prefers and sells more Medigap coverage.

But traditional Medicare is getting more expensive.

The monthly Part B premiums, which originally cost $3, will cost $170 in 2022, up from $148.50 the year before.

Medigap, which can be used to pay deductibles, costs nearly as much. The three largest providers of supplemental insurance in New Hampshire — Anthem (with a 37 percent market share), United (29 percent) and Harvard Pilgrim (8 percent) — charge from $141 to $162 per month for the most popular plan at age 65, depending on gender.

The Medicare standardized plans are “vanilla,” said White, but there are some restrictions on preexisting conditions, so whatever plan you go with, you may be stuck with. (For that reason, those switching back from Medicare Advantage to traditional Medicare may not be able to get a lower-priced supplemental plan.) Another reason is that in New Hampshire, your premiums won’t go up based on age, just by the cost of medical care. In most states, both factors are included.

Drug premiums nationally have gone up by 15 percent compared to last year, to about $43 for 2022, according to the Kaiser Family Foundation, but many have deductibles of more than $300.

There are 21 drug plans offered in New Hampshire, with premiums ranging from $12 to nearly $100 a month, and here there is more variety in how much they will pay for various drugs at various stores.

“Each company favors its own special pharmacist,” said White. CVS owns Aetna, Humana partners with Walmart and United with Walgreens. Not surprisingly, the top Part D companies nationally by market share are United (23 percent), Humana (17 percent) and CVS/Aetna (16 percent). Finding the most affordable plan for each person is so complicated that White uses a software program.

Switch to Advantage

Taken together, the monthly premiums for Medicare now add up to at least $354 a month. For most people used to paying premiums for workplace or individual insurance, that seems pretty low.

But not compared to Medicare Advantage, which usually includes all of the above (89 percent include drug coverage), dental, vision, hearing and more, for about $40. And that’s an average. Two-thirds don’t have any premiums at all.

Nationally, United has the largest Medicare Advantage market share, 27 percent and growing, followed by Humana at 18 percent and Anthem at 14 percent. In New Hampshire, United is doing even better, claiming 41 percent of the Medicare Advantage market, or about 32,000 members.

Among the perks is a limited number of house calls for chronic conditions.

Humana didn’t get back to us by deadline, and Anthem declined to provide membership numbers or market share locally.

Anthem has six plans, and it is pushing its “Essential Extra” packages, which include a $500 flex card, a grocery card, allowance for safety devices, a fitness tracker, meals, a personal home helper for those who need it, transportation and even pest control if the pests “impact a chronic condition.”

It also offers a plan that includes all of those “Essential Extras” as well as service dog support and acupuncture, with no premiums.

Harvard Pilgrim Health Care has about 10,000 individuals covered in its Medicare Advantage plan, which makes up about 12 percent of the New Hampshire market, compared to 7,000 using its Medigap plan.

“In New Hampshire, we are noticing a switch from our Medicare Supplement to our Medicare Advantage plans,” said Kimberly Winn, a Harvard Pilgrim spokes person.

“Seniors are selecting Medicare Advantage plans with lower monthly premiums as they look for comparable coverage for less money.”

But it is hard to compare the plans. In addition to the question of choice, Medicare deductibles are pretty low: $1,484 for hospital (per illness), and Part B is a little more than $200, without Medigap insurance. There is an out-of-pocket limit for Medicare Advantage: $5,000 in network and $9,200 out of network. While Medicare Advantage has the advantage when to comes to short hospital stays, traditional Medicare will protect you better after three days, according to a Kaiser analysis.

Improper payment rates

All this means traditional Medicare Advantage plans tend to attract more healthy individuals, meaning lower costs. But Medicare pays Medicare Advantage firms more money — $364 billion in 2021, or 46 percent of the Medicare pot — even though they insured 42 percent of Medicare recipients, according to the Kaiser analysis.

The payments are based on a benchmark rate that’s supposed to be based on feefor-service costs. Medicare Advantage bids promising to deliver the same services for a lower price (with 15 percent allowed for administration and profit). If that bid falls below the benchmark rate, then the beneficiary doesn’t pay a premium and the bidder then gets a rebate of up to 50 to 70 percent of the difference, which they can use for the perks Medicare doesn’t normally fund. In addition, there is a risk adjustment based on the population and diagnoses of the population.

In 2022, the average New Hampshire benchmark — it differs slightly in each county — is about $1,045 for no-bonus plans, 6 percent more than last year and 28 percent over five years ago.

But the bonus payments have almost quadrupled nationally, from $3 billion in 2015 to $11.6 billion. More companies are getting them, and the average rebate per enrollee has more than doubled, rising from $184 to $446, according to Kaiser.

Most of that growth has been in group plans, which are sponsored by employers for their older workforce, retirement groups and unions. These got 38 percent of the bonus money even though they constitute 19 percent of the plan. The average group plan bonus is $886.

Thanks to a rule change under the Trump administration, groups can enroll people automatically in Medicare Advantage plans, unless they opt out. This has drawn criticism from the Center for Medicare Advocacy, which argues that traditional Medicare, by law, should be the default option.

Bonus payments have come under scrutiny, especially since the Congressional Budget Office warned that the Medicare Hospital Insurance Trust Fund would be insolvent within two years. In response, the Medicare Payment Advisory Commission proposed eliminating bonus payments. The commission argued that the system has become so complicated it’s hard to determine if it’s being abused.

But that proposal has generated fierce opposition. In October, some 13 senators, including Jeanne Shaheen of New Hampshire, signed a letter opposing Medicare Advantage cuts, noting that affordable premiums attract people with lower incomes.

Black and Latino people, for instance, account for 31 percent of Medicare Advantage beneficiaries, compared to 21 percent in traditional Medicare.

And the risk adjustment payment also has come under scrutiny. The Government Accountability Office has issued several reports charging that insurers alter diagnoses to indicate that the population is sicker than described in order to inflate payments. Some $6.7 billion was paid out because of such methods in 2017, according to one 2019 report. Indeed, CMS now annually keeps track of “improper payments” that may or may not be related to fraud.

The traditional Medicare improper payment rate for claims processed July 1, 2018, and June 30, 2019, was 6.3 percent, or about $25.7 billion. The rate for Medicare Advantage was about 6.8 percent, or $16.27 billion.

From July 1, 2019, to June 30, 2020, the traditional Medicare improper payment rate remained the same, but the Medicare Advantage rate was 10.28 percent. No information was yet available on 2021 overpayments.

With that kind of money being thrown around, it’s likely that Medicare Advantage plans will continue to grow at the expense of traditional Medicare. According to the Congressional Budget Office, they will encompass half of the entire Medicare population by the end of the decade, if not sooner.

“Medicare for All” may be the rallying cry for the left as an alternative to what they perceive as insurance companies unjustly profiting and exerting undue influence over healthcare. In reality, Medicare is increasingly not an alternative to private healthcare, but an extension of it.