October 15, 2009
Free aspirin; free Band-Aids; free blood pressure machines; free ear thermometers; free prescription eyeglasses; free hearing aids; and free gym membership: Just some of the many “freebies” that insurance companies offer recipients to abandon Medicare and sign up with them for Medicare Advantage. But there’s a problem: Those things aren’t “free” — we taxpayers pay for all those “gifts”.
The Washington Post says there are 45 million of us seniors on Medicare (I’m one of them). About 11.2 million, or one-fourth, have chosen Medicare Advantage over traditional Medicare. These are programs that insurance companies offer as a “one-stop shop” for those that are eligible for Medicare. That translates into the insurance company paying for hospital stays, doctor visits, and prescription drugs, leaving the recipients not having to deal with Medicare. Plus the recipient doesn’t have to purchase supplemental insurance that most traditional Medicare recipients do so as not to be stuck with deductions. But there are very expensive “gotcha’s” that come along with these programs.
In almost every case the program cost recipients more than it would cost them with traditional Medicare when they use the services. They pay fees for doctor visits in addition to their co-pays. Hospital stays hit them even harder. I personally know of several people who received bills in the thousands after a leaving the hospital. One niece had to pay $8,000 and a sister $4,000 that otherwise would have been paid by traditional Medicare. In addition, primary-care doctors are limited to a network, and insurance companies often deny coverage. Unless you are a very healthy senior who hardly ever sees a doctor or has a stay in the hospital, these programs are a scam. (I’ve written about this program before, the latest being this one.)
The insurance company gets paid by Medicare. Some insurance companies will charge the recipient an additional monthly fee, but in most cases they wavier that fee. Up front, this becomes a huge selling point, most especially for those that are on a very limited and/or fixed income (that’s how my niece and sister got took in). And all those freebies? Well, Medicare gets back-charged for those.
According to the Post article, insurance companies charge Medicare an average of $120 more per month for each recipient than what it cost Medicare for traditional recipients. That amounts to $1,320,000,000 per year in extras ($1.3 billion). Obviously no one is paying attention at Medicare or, more likely, doesn’t give a hoot. But that’s $1.3 billion coming out of us taxpayers’ pockets for “freebies” so the insurance companies can entice seniors to sign up with them. No wonder the industry is raising so much hell about President Obama wanting to cut wasteful spending in Medicare. And all those millions of dollars insurance companies are spending to tell seniors they will loose benefits if health care reform is passed? Well, that’s mostly those “freebies”, but insurance companies will also have to start charging recipients a monthly fee like Medicare does. But where they will be hit the hardest is they will have to stop making recipients pay all those back-end deductions if they want to compete with Medicare.