Medicare Disadvantage

Privatized Health Care For Seniors Can Leave Them In The Dark As Insurance Companies Reap A Windfall

(CBS)  It was the summer of 1965 when Medicare was created to provide government-sponsored health care for seniors. Today some $381 billion tax dollars a year are spent on Americans 65 and older.

But in recent years, more and more Americans — 8.3 million and rising — are getting Medicare through private insurance companies. Tonight, CBS News chief investigative correspondent Armen Keteyian takes a closer look at the program critics charge has turned into a disadvantage for seniors, and a windfall for the insurance industry.

---

It was the winter of 2003 when Congress, in the dead of night, overhauled Medicare.

"This prescription drug benefit is a good deal for all seniors," said Rep. Dennis Hastert, R-Ill.

But buried inside the bill was another deal — one that CBS News investigation has discovered was not necessarily a benefit for seniors.

A large portion of one of the most successful public programs in history was quietly placed in the hands of private insurance companies. The goal of Medicare Advantage: to provide seniors with more benefits, like vision and dental care, and control rising costs. But today, for seniors like Aaron Cohen, it's become Medicare Dis-Advantage.

"I'd rather go back to the old-fashioned Medicare," Cohen told Keteyian.

Cohen, an 86-year-old who lives in Connecticut, says he switched to an advantage plan only after a salesman assured him he would be completely covered while staying in Florida.

But after breaking his leg in that state, Cohen began to believe he had been sold a bill of goods.

"There was something radically wrong," Cohen said. "They wouldn't give me any home therapy, claiming that it wasn't covered."

But that's only part of the problem. With traditional Medicare, there's one plan for everyone, everywhere. Private Medicare Advantage offers as many as 50 different plans, causing untold confusion over coverage, premiums, co-pays, provider networks.

"These insurance benefit packages are very complicated. Almost nobody without really technical sophistication can figure out exactly what they are buying," said Robert Hayes, who runs the Medicare Rights Center.

Hayes said every year his staff fields thousands of calls from seniors scared to death they've made the wrong choice.

Not only are private plans more confusing, they are more expensive to taxpayers.

In fact, three independent reports found private insurance companies are paid, on average, 12 percent more than what it cost the federal government to run Medicare — in some cases, 50 percent more.

---

FYI: Find out more about private medicare and how to find help navigating the system.

---

The head of Medicare insists private plans give you more for your money.

"I think there is a lot more that we could do in regular Medicare that we aren't doing currently, that some of the Medicare Advantage plans are able to do because of how the payment structure works," Leslie Norwalk told Keteyian.

But how much of that money is going back into the pockets of the insurance companies?

"Well, it's required by law: 25 percent goes back to the federal treasury, 75 percent goes back to the beneficiary," Norwalk said.

So the insurance companies are doing this, what, out of the kindness of their hearts, asked Keteyian?

"There, there would be, I'm sure, some small amount to administer the additional benefits," Norwalk said.

But CBS News has found that's not always the case. An independent report found when it comes to the fastest-growing plans, known as private fee-for-service, half of that extra money goes back to the insurance companies. All these private Medicare plans are expected to cost taxpayers an additional $54 billion over the next five years.

"Taxpayers are losing; people in Medicare are losing," Hayes said. "And the structure of Medicare as a national treasure that we need to rely on moving forward, is being undermined."

So much so that key Congressional Democrats now want to cut payments to private plans. The insurance industry is fighting back with a direct mail campaign urging seniors to contact their representatives.

Ironically, Cohen got one of the letters. On the back, his very personal feelings about his Medicare Advantage plan.

"This plan is worthless," he wrote.

Make the health care the same as education, take the services you already pay for in your taxes, or pay extra for more.

Make medicare available to all.

The US forces already use the health services that we all pay for in our taxes, expand that.

[elderseeley]

I think that all members of congress should be placed under the social security system for retirement benefits and should be placed within the medicare system which the rest of us must suffer through. Something tells me there would be some changes.

[donhov]

Wife recently was enrolled in a Medicare palan effective June 1 07. We waited to use it due to better coverge than our current BC/BS plan. AFter 6 weeks while registering for a hospital visit we found out we have a Medicare Advantage plan. Different numbewrs etc. Now it is up to us to make all thecorrections with 5 doctors and hosp[ital. Lotsa tiem on the phone and all because no one bothered to tell us. Not very happy at this time. Like above make senate, house and all elected officals deal with the regular system we all have to and get rid of most of their perks.

[tnt1954]

government hospitals and government doctors
and government medical care is always better.
capitalistic medicine is too tempting.
diagnose everyone as sick and make a killing.
ms. so and so, you need to come in for
fifty five years five times a week for
major therapy. you have goldbrick's disease,
a very serious disorder. there is no cure,
but there is treatment for the rest of your
life. i'm glad you have a gold account.
your nest egg, is just what i need, a nice
golden egg. my star patient who made me
one of the wealthiest men in the world.

[slim1h2o]

The medical/insurance industry is nothing more than a scam. Just like snidegrass said, they keep you sick but functioning,...... maybe.

The doctors fill you up with drugs, and send you on your way.............BTW, my friends dog has received better medical treatment from the veterinarian than I got from UNC hospitals. Nothing but a scam.

[west89119]

Notice that there were no references, and one senior ( of millions ) was cited with a bad experience.
Thats statistics!
I know many many people on Medicare Advantage that have had very positive experiences. Surguries that would have cost hundreds of thousands for co-pays below $ 100.00 ... thats common ( Medicare alone would have started the hospital bill for over $ 900.00 ) Katie, did you miss that? Prior to Part D. Meds were limited to Generic, if that. Now people have great access to prescriptions. The insurance companies are getting less per member, but having to give more. They are just better at negotiating healthcare costs. We have a good system, ask a senior citizen how long the waiting list in Canada is for a procedure..
Lets have some fair balance in reporting CBS .. or is it, only bad news sells ?

[ralan40]

simply put, the Government can't do Medicare as efficiently as private payors. They pay Private Payors $1.30 for each dollar paid. The insurance carriers utilize their current claims-processing infrastucture to pay claims more efficiently than CMS.
All you poeple who think the Govt should run Healthcare, take note of this. The biggest problem is that Health Carriers like Anthem, Aetna, and UHC are "for profit" - they have to pay CEOs hundreds of millions and also answer to shareholders. My company is still a Mutual Insurance Company, owned by policyholders, yet we must stay competative to the larger "for profit" carriers. they pay their CEOs (in the Case of UHC, 1.3 BILLION in bonuses) and kick some to the shareholders. Now, don't you think those kickbacks is cutting into the pay out of benefit dollars??

Some of you posters just do not have a clue where the problem really lies. You critisize the Govt when they do things inefficiently yet expect them to solve our problems. How do you reconcile those 2 ideas?.

Amazing, when you post, the news media's lips barely move.

[aa46282]

I work in the adantage feild, and I know, thousands of people who are happy with it. It pays a lot better then medicare, and clients can have a larger network of providers. Any person buying an inusrance plan needs to talk with a professinal. Someone who does it for a living. This broadcast was clearly not researched properly. All of those who have posted comments are probably not on medicare, adn has never received a bill after seeign a dr with just medicare.
Keep that in mind!

[nelms01]

A retired actuary, I have found Medicare Advantage plans to be well designed and much more advantageous, for the price, for the plan members. Mine have included membership in the senior exercise program Silver Sneakers, which promotes a healthy lifestyle and which my wife and I have found to be wonderful. I have coverage wherever in the world I travel, and no deductibles beyond my copays, which are extremely reasonable. Health providers don't have to chase after their 20% of the approved fee, so these plans are good for them too. Those who gripe obviously don't understand, but they can switch back to basic Medicare at year-end!

[sclaires]

I talk frequently with a friend in California who is on Medicare along with her mother. Her mother was with Kaiser out there which was supposed to supplement her Medicare but it didn't. Every time her mother was in the hospital, she had to pay $200 per day which meant she was paying more per stay then the Medicare deductible. And, the doctors kept putting the mother in the hospital for this, that, and the other which meant that she was constantly running up large bills at the hospital. Finally my friend got fed up with the way Kaiser was doing and was able to remove her mother from them. Now, her mother is doing much better with a change in doctors and no visits to the hospital. It seems as though the medication the Kaiser doctors were giving her had adverse effects which sent her to the hospital. And, Momma is about 96 and doing good.

[ltzbest]

I have been an insurance agent for the past 18 years. During this time I have primarily worked with seniors, advising them on their health benefits. I am very familiar with Medicare and all of the different plan options they have today, including Medicare Advantage plans. These plans are a good benefit to both the government and to Medicare beneficiaries. This story is so obviously misreported. However, there have been abuses in the way these plan have been marketed. The primary problem is that they are sold to many people who do not understand what they are buying. Complicating matters more is that many doctors and hospitals do not understand how they work. What's needed is more education about this optional Medicare coverage to all parties involved. What doesn't help is more misrepresentation- this time on the part of the news media. this is beginning to look more and more like a well orchesrated campaign to get rid of anything to do with free market solutions and bring about a single payor system.
In short, these plans are a great fit for the right person who buys one from an agent that is well trained and thorough in their presentation.

[pledden-2009]

This story has grossly misrepresented the facts about Medicare Advantage Plans. Basic Medicare A&B only pays for about 80% of doctor and hospital expenses...that's why seniors (who could afford it) purchased Medicare Supplements at monthly premiums of ~$100-$300 per month for years. Medicare Advantage Plans offer standard co-payments for Medicare covered services, extra benefits and low or NO premiums. People who have had ACTUAL experience using Medicare and have done the analysis with a caring and qualified agent, see Medicare Advantage Plans as a sound alternative way to manage their health care risk. Medicare Advantage sales materials are fully scrutinized and approved by Medicare and clearly show the contrast (point by point) between traditional Medicare and Medicare Advantage Plans. It is a shame that no CBS reporter took the time to read these materials or walk through a sales presentation with a certified agent. In addition, seniors can change their Medicare Advantage Plan every year or go back to original Medicare. CBS did not do the research on this story. I hope NBC or ABC will present a more accurate view of these plans, Medicare in general and the role of private insurance companies in delivering care to our seniors. Doctors put their parents on these plans because they know they work. It is so simple to get good information instead of creating fear and distrust. Shame on CBS for this story.

[zyreeta318]

This story was falsely represented. Medicare Advantage plans are approved by medicare (sometimes called Part C) and run by private companies. They are designed to reduce the cost of persons having Original Medicare to rely on for health care coverage and who is seeking to reduce the cost of supplemental plans(which range between $100-$300 month). Ms. Keteyian did not do her homework. Unfortunately, just as there are rogue lawyers, doctors, and even journalist in this world, there also exist rogue insurance agents. But just because a few lawyers or doctors dont do a good job, doesnt mean that people stop seeking lawyers for help or doctors for healthcare. The same applies here. When you examine pages 105-106 of the Medicare and You book for 2007, you can accurately view the cost that seniors are expose to just to seek medical attention. It is a disgrace. Medicare Advantage have provided a helpful solution to our seniors for several years now. To demolish the Medicare Advantage plans would be devastating to our nations seniors. There are really caring insurance agents out there who truly care about seniors - and not all are out just for the money. Otherwise we could say that about all the doctors, lawyers, and even journalist out there - some people really care.

[hark551]

I have been in the Senior Market Insurance business for 36 years.Medicare advantage is a product designed to mislead Seniors and yes every liar in the U.S. is selling this. I made the mistake of selling three plans for a special needs product here in South Carolina. The insurance company lied to me verbally and in print as to what in fact their contract would do. So far I have filed complaint with the South Carolina Attorney Generals office who turned it over to the U.S. Attorneys office and now is in the hands of CMS. These people are still selling this trash. I find it hard to believe lawmakers have unleased these plans for sale to our Senior Citizens. I for one would like to see our Governor hold a press conference out at Fort Sumter, and tell our lawmakers in Washington to go elsewhere with this trash and stay out of South Carolina

[pledden-2009]

I would encourage CBS to spend one day with a certified agent from a reputable company who is doing the job according to Medicare standards. You could see how much care is taken to examine all of Medicare's solutions, including Medicare Advantage. You could see the relief on the faces of severely ill or disabled people when they discover that Medicare (and private healthcare companies) won't exclude them from coverage for their pre-existing conditions; when they realize the relief from their existing healthcare premiums or even worse, no coverage at all. People are relieved to pay very low premiums for improved healthcare and complimentary benefits that help address physical fitness, brain fitness, eye exams, eyewear and other needs. If CBS would walk with good agents, spend the needed hours (yes, hours) to compare options with Medicare recipients, CBS would also see agents walk away if the coverage is inappropriate or if more research is needed.

[jrwoodward-2009]

What amazes me is how CBS spins this story as to convince the viewer as to a personal agenda. There is not one story of a satisfied senior enrolled in a Medicare Advantage plan. I can personally point them to plenty if they would like; I talk to them everyday. Yes, I%u2019m an insurance agent and the company I represent offers both Medicare Advantage plans and traditional Medigap/supplement plans. I can truly talk to any senior in America and counsel them on which way to go. I do not expect CBS to keep my post up because it speaks the truth. MA plans are not for everyone, nor are Medicare supplement plans nor Original Medicare alone. Each person has a different set of needs and there are many solutions. Yes, there is a problem with dishonest insurances agents abusing the system and they should be punished to the fullest. However, spinning this story to slant the viewer on the author%u2019s agenda is wrong. A topic this sensitive needs to have all the facts told, not just the sad or bad situations. Today%u2019s senior has a hard enough time knowing what to do and who to trust, and to have a major network report only part of the story is as wrong and dishonest as a corrupt agent abusing the system. Shame on you CBS!

[reaze1]

I would like to see a side by side comparision of normal out of pocket expenses for a beneficiary covered under Original Medicare vs. a Medicare Advantage plan for the same services. While I do believe that there are reputable companies selling Medicare beneficiaries MA plans, I have heard multiple reports of companies going into to nursing homes and marketing the plans-even to dual eligible Medicare/Medicaid beneficiaries. Who is paying the additional premium if the individual has Medicaid secondary? Is the state paying the premium? If a beneficiary is dually eligible they are already considered low income. To me this reeks of taking advantage of the already disadvantaged. In addition the stories I have been told indicate the individuals had no idea what they were signing up for--how it would change their selection of physicians etc. From a journalistic perspective I would also like to see a report on the impact to hospitals and physicians--are they really getting paid more or waiting longer for claims to be paid and having difficulty dealing with the MA plans? Anytime the structure of healthcare payment changes it impacts not only the covered beneficiaries but those entities who provide services. On a personal note my mother is a retired teacher and was placed into a Medicare Advantage Plan in January-not by choice. She was told that "nothing" would change--which was not entirely true.

[kyarcho]

Thank you for doing this story. I work in the healthcare industry and have had experience with the lack of payment and the untruths that these companies tell their patients.
My father's employer switched to PPF this year. It has been a nightmare since. I have spent over 40 hours researching this. the PPF companies continue to say that they cover the same thing as Medicare but that it is not true.
In the bill that was passed these companies can set their reimbursement rate at what they want. Medicare can do nothing about it. There are now thousands of our elderly now with less coverage and increased cost out of their pockets.
America needs to wake up and realize that the increased cost of healthcare has not been because of the providers it has been because of the insurance companies.
I urge all to contact their representatives.

[DrColes]

Medicare is a benefit earned, paid for by citizen workers and even when they retire and obtain their Medicare benefit; they still pay premiums and co-payments. In addition to this 50% of the workers die before they can claim there earned benefits. The Part D benefit is costly because Congress bares Medicare from negotiating the cost of drugs. The program is expensive because of our incompetent/dishonest Congress.