Medicare Has Succeeded Where Private Insurance Has Failed

When Medicare was created in 1965 over 50% of everyone 65 or older had no health insurance. Private insurance failed to meet their needs. Medicare, on the other hand, is a success. It increased the number of insured older adults to 95%. In 1972 Medicare coverage was extended to people with significant disabilities. But Medicare's success in providing access to health care for millions of people is in danger. Ironically, the threat comes from private insurance plans. Funded by windfall subsidies from taxpayer dollars, privatization is jeopardizing the cost-effective, dependable Medicare program.

Since 2003 the number and costs of private Medicare plans have increased exponentially as a result of the design of Medicare Part D and "Medicare Advantage". Unlike plans to privatize Social Security, which were debated and largely rejected by lay people and professionals alike, the privatization of Medicare is well underway and has occurred largely without public knowledge or discussion. Medicare privatization and the billions of dollars being spent to subsidize private plans threaten the future of Medicare and the health and economic security the Medicare public program has provided for America’s older and disabled people and their families.

Medicare wasn't broken, but because of the ever-increasing private Medicare options, it is breaking. The myriad private plans are creating confusion and barriers to care for real people. The Center for Medicare Advocacy is contacted everyday by people who were inappropriately marketed to; people who did not understand what they were getting into, people who have been unable to get the health care services they need from their Medicare Advantage (MA) plan, and people who are "locked into" their MA plan. Further, the Center gets calls for help from people who thought they had MA "on top of" their regular Medicare and/or Medigap and are surprised to find out that is not true when the service or provider they need is not covered by their MA plan.

Medicare privatization costs taxpayers approximately billions of dollars every year, while it hurts many people with Medicare and strangles the traditional Medicare program. Consider these stories from just a few of the Center’s clients:

• Mrs. P is a 67 year old woman who was diagnosed with ALS three years ago. She contacted the Center for help because her private Medicare plan cut off all her home care, saying she was "stable" and no longer needed home health services. CMS said the coverage decision was up to the plan and would not intervene. The Center for Medicare Advocacy filed a case in federal court seeking continued coverage for Mrs. P. The Court ordered Medicare to cover Mrs. P.’s home care; she was therefore able to stay at home with the health care she needs. Without Medicare coverage and this necessary home care, Mrs. P. would have been forced to enter a nursing home.
   
• A Congressman called the Center to obtain help for a constituent who he met at a local town hall meeting. Mr. B and his wife were members of a Medicare Advantage plan in Connecticut. They went to Florida for vacation where Mrs. B fell and was sent to the hospital to treat her injuries. Tests at the hospital showed that, unbeknownst to Mrs. B, she had a brain tumor. Doctors determined she needed treatment immediately. Because Mr. B is frail himself and the couple’s daughter in Utah is a nurse, they decided to go there for Mrs. B’s chemotherapy. Upon receiving the chemotherapy, however, Mrs. B had a life threatening reaction that resulted in her being in the Intensive Care Unit for days. She ultimately died. The hospital bill came to $100,000 and was completely denied by the Medicare Advantage plan because Mrs. B was "out of network". The Center appealed. Finally, after an administrative hearing most of the bill was paid in recognition that the care received after Mrs. B’s reaction to treatment was emergency services.
   
• Mrs. W called us with a Medicare Advantage (MA) problem. She went from a hospital to a nursing home and was being billed for $13,000 because the nursing home was out of her MA plan’s network. She had been told by both the hospital and nursing home staff that original Medicare would cover her nursing home stay, even though she had an MA plan. This is not true. The beneficiary herself is extremely confused and was unable to answer any of the Center attorney’s questions.
   
• The Center has a case pending for an individual who is in an MA plan in Connecticut and went out of network for doctor’s services. He was billed $5,000 for these services. This individual is functionally illiterate and did not understand that he could only see providers in the plan’s network when he signed up for the MA plan. He says he did not receive any booklets or anything in writing from the MA plan regarding the network’s providers. Even if he did, he likely wouldn’t have been able to read the information or comprehend the concept of a network.
   
• A Center attorney received a call from a woman with significant MA concerns. She and her husband were visited by an MA marketing representative for a Private Fee For Service Plan (PFFS). He came door to door and was absolutely not invited. The woman told our attorney that both she and her husband suffer from brain injuries and previous strokes and that they were both distressed when the agent came into their home. He told them that he wanted to talk to them about a "new kind of Medicare." She said that she listened but did not understand and that he gave too much information too fast. She said she filled out the form he had and said yes to all of his questions just to get him to leave her home; this all happened in January, 2007.

When the woman called the marketing representative to disenroll the representative told her to just send a letter to the plan and that would effectuate disenrollment. She did so in January but had not been disenrolled when she contacted the Center six months later. During that time, she and her husband needed and received medical services, for which they were billed and sent to collection. The husband requires injections from an oncologist which cost $3000 each; he needed three during this period. Other services received during the period included doctors’ visits, a hospital CT scan, neurologist visits, and endocrinologist visits.

• Mr. N, one of the Center’s clients had traditional Medicare along with a Medigap supplemental policy. He was approached by an MA plan while at his dialysis unit, which is now a marketing violation. He was told that the MA plan and the Medigap policy together would cover all his expenses. Mrs. N called the Center because they are now receiving bills for the balance of what the MA plan did not cover. When she contacted the Medigap representative, he told her that because she now is in an MA plan, the Medigap won't cover the balance. Mrs. N then called the MA plan to disenroll because she is worse off than before joining the MA. They told her she couldn't disenroll at this time.

The Center is working to retroactively disenroll Mr. N from the MA plan based upon the misinformation that he was given by the marketing representative. Hopefully, if the retroactive MA disenrollment is granted, the Medigap policy will provide retroactive coverage for the past bills.

• A Center attorney received a call from the daughter of a beneficiary who speaks very little English. Apparently an agent from an MA plan in Hartford, CT came door-to-door without being invited (which is a marketing violation), visited this woman's mother and got her to sign an application. The representative told the mother that everything would be "free". The daughter called the plan and was able to get her mother disenrolled. But, Social Security is still deducting the monthly premium for the MA plan from her mother's Social Security check so she called the Center to get help with the premium problems. Her mother needs the money.
   
• The Center was contacted by the daughter of a woman who signed up for an MA plan. Apparently representatives from the MA plan called and asked if they could come to the mother's home. She, and the daughter, visited with the representatives and made it very clear that what they were looking for 100% coverage of the mother's dialysis treatments. The representatives told them that if she signed up her dialysis treatments would be covered 100%. It soon became clear to the mother and daughter that the plan only covers 80% of dialysis treatments, the same as traditional Medicare. In addition, it became clear that the plan never should have offered to sign her up in the first place because she has ESRD which precludes her from signing up for this plan.
   
• Another gentleman called the Center. He was visited by an MA plan and was told that the plan was "free" – which it is not. He received a letter from Social Security stating that $46.00 would be deducted from his Social Security check. This is how he found out that the plan was not "free.""

"Medicare Advantage" is starving the successful traditional Medicare program and hurting beneficiaries. Studies by MedPAC, the Congressional Budget Office, and the Commonwealth Fund and numerous scholars confirm that taxpayers are spending between 12% – 19% more on private plans than it would cost to serve the same people in the traditional Medicare program. Meanwhile, private Medicare has proven far less able to provide secure health insurance and a wide choice of doctors and other health care providers for older people and people with disabilities.

Medicare was enacted in 1965 because private industry failed to insure more than 50% of older people. It would be ironic if privatization condemned Medicare now, returning older and disabled people to the vagaries of the private, for-profit insurance industry.

The solution for the Medicare crisis is not to increase the eligibility age or decrease benefits, but to stop privatizing it at the expense of older people and taxpayers.

Judith Stein
Center for Medicare Advocacy, Inc.
October 15, 2008