WASHINGTON, DC – Open enrollment for Medicare health insurance is from October 15th to December 7th; therefore, eligible persons may be faced with choosing their Medicare plan for the first time or may consider changing plans. They must decide between government-run traditional Medicare or a Medicare Advantage (MA) plan managed by private-health insurance companies. Traditional Medicare is the same as original Medicare. MA is also called Managed Medicare and Medicare Part C and has become an increasingly popular option with total enrollment more than doubling over the past decade. In 2023, Medicare beneficiaries are split almost equally between choosing traditional Medicare and MA. However, neither traditional Medicare nor MA is right for everyone because of the many differences between the plans. Therefore, Medicare-eligible people will need to identify those advantages and disadvantages for each plan before making their choice during the open enrollment period. Although there is much written on this subject, there does not appear to be a direct comparison of the pros and cons of traditional Medicare versus MA.
Traditional Medicare is based on a fee-for-service model. The enrollee can go to doctors and hospitals that accepts Medicare and is responsible for copays and deductibles for services and doctor visits. The doctors and hospitals bill Medicare and the federal government pays them. This plan is managed by the federal government, including Congress and the Centers for Medicare & Medicaid Services (CMS).
Medicare Advantage is based on a managed-care model. The beneficiary can go to doctors and hospitals that are on the MA plan panel and is responsible for copays and deductibles for services and doctor visits. The doctors and hospitals bill the MA plan and the plan pays them. MA plans receive a predetermined monthly risk-adjusted payment from the federal Medicare program to provide health care to the enrollee. CMS allows the MA plans to set their own rates. The private insurance companies negotiate their fee schedule with doctors and hospitals which frequently pay less than traditional Medicare for the same service. The plan is managed by the private-health insurance company and makes a profit by providing health care and keeping the cost for care less than the government payment.
Medicare provides health insurance to 66 million people, consisting of older Americans, and younger people with disabilities and certain chronic diseases. Traditional Medicare, first passed by Congress in 1965, consists of Part A (for in-hospital care), Part B (for outpatient care including doctor visits) and Part D (for prescription drugs). Medicare Part C (the MA plan), authorized by Congress in 1997, covers Parts A and B and usually D (depending on the plan). Therefore, MA bundles hospital, doctor and prescription coverage in one plan.
Working people pay into Medicare through payroll deductions. Both traditional Medicare and MA beneficiaries are also billed after enrollment. Traditional Medicare does not cover all the bills for Part A & B insurance so many beneficiaries obtain supplemental insurance sold by private insurers, known as a Medigap plan, that help to pay some of the remaining costs. People with low resources can qualify for Medicaid or Medicare Savings Plan, administered by the federal government. Medicare Part D insurance is also available through private insurers.
The initial plan selection is of critical importance. Most people are healthier when they enroll in Medicare; however, they can develop more health problems as they get older and their health care utilization can change. In most states, if someone doesn’t sign up for Medicare supplemental insurance when first signing up for Medicare, the insurance companies can either refuse to offer a plan or charge high premiums for a preexisting condition. This may become a costly problem when attempting to transfer from a MA plan to traditional Medicare later on.
Advantages to consider when choosing a traditional Medicare plan are:
- Freedom to go to most any doctor or hospital in the country
- No referral needed to see a specialist
- No prior authorization needed for tests and procedures
Advantages to consider when choosing a MA plan are:
- Extra benefits like basic dental, vision, and hearing services (offered by most plans)
- Over-the-counter medication reimbursement, coverage for buying healthy food, adaptive changes to homes, gym memberships, and/or transportation for medical appointments (offered by some plans)
- An annual out-of-pocket cap
- Only 1 regular payment
- May be less expensive
Disadvantages to consider when choosing a traditional Medicare plan are:
- More regular payments, for Part B, Part D, and a Medigap policy
- May be more costly than MA because there is no annual cap.
- Your insurance agent or broker earns more money for signing people up for a MA plan.
Disadvantages to consider when choosing a MA plan are:
- Restrictive networks of doctors and hospitals to a particular geographic region. Persons requiring medical care while away from home may not have their health care covered. Beneficiaries may not be able to receive specialized surgery or highly advanced therapies if in-network providers do not provide this service.
- Prior authorization required for some services. Beneficiaries frequently may be denied care that they need and would be allowed by traditional Medicare, according to a 2022 reportby the Government Accountability Office (GAO).
- Referrals required to specialist physicians
- Many high medical needs patients were likely to switch from MA plans to traditional Medicare (Brown University study). The 2022 GAO report agreed and felt that the reason was due to the difficulty getting the care needed.
- Many hospitals and doctors are dropping MA plans over payment disputes so beneficiaries lose their doctors and hospitals and have fewer choices for care.
Open enrollment is the time for persons eligible for Medicare health insurance to choose their Medicare plan for the first time or consider changing plans. They must choose between government-run traditional Medicare or a MA plan. The number of eligible persons choosing MA has doubled over the past decade indicating the competitive nature of both choices. However, there is no “one size fits all” when it comes to Medicare plans. Therefore, people who are eligible for Medicare will need to study the advantages and disadvantages for each plan before making their choice. It is important for people to consider “The Triple Aim” of health care of optimal health, a good experience of care, and a fair price. According to Chiquita Brooks-LaSure, CMS Administrator, “I believe it’s critical that people have a choice between traditional original Medicare and Medicare Advantage.”
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Contact: Dr. Dick Needleman, Health reporter, 103.3 AshevilleFM, healthyasheville@ashevillefm.org