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May 6, 2011 > HealthCare...Who Cares?

HealthCare...Who Cares?

By J. Dennis Wolfe

The greatest issue we face as a society is how to fund the cost of health care; cost-protection for our aging population who are approaching 65? This is more than a funding question to me. It strikes at the heart of how we define ourselves as a country. As baby boomer who is a whole lot closer to Age 65 than I am to Age 21, I understand this. People who work in medical offices can tell you stories about how an aging population needs care in ever increasing numbers, making delivery of that care increasingly more difficult. Can Medicare survive as the exclusive provider? I believe that the answer is "no" for two key reasons.

One is the increasing amount of funding needed for the ever-growing federal bureaucracy that administers the Medicare program; the money is simply not there. This leads to the second reason... since it is almost an unwritten law that federal bureaucracies grow exponentially with less funding on the horizon, the only place to cut in Medicare is benefits. The result is an extensive national discussion on Medicare rationing.

For this reason I believe the Medicare Advantage (MA) product is going to become an increasingly better choice for all Medicare-eligible people. For those unfamiliar with the MA program with or without Part D, refer to one of my earlier columns for a refresher. Suffice it to say that the MA product is marketed and administered by private insurance companies who contract with Medicare. Once enrolled in a MA product, Medicare pays the insurance company a fixed amount per enrollee (you) and they administer your claims/benefits.

The MA carrier can charge a premium or not. Anthem for example offers a zero premium product marketed as Freedom Blue, while Kaiser charges about $75 a month for its Secure Advantage. These premiums include Part D prescription drug coverage.

The key to MA carrier success is a basic tenet of how to do business. They trim overhead to maximize their bottom line while working to increase sales (market share). I don't have the exact numbers but I recall hearing from sources in my industry that Anthem set a goal of 1,000,000 new enrollees last year and instead had 2,000,000 new enrollees. These dramatic increases in enrollment explain why Anthem has been able to maintain a zero premium. Why did this dramatic increase in MA enrollment happen? I submit it is a statement of how poorly Medicare is functioning.

When a Medicare-eligible individual elects to directly enroll in Medicare, that person must also obtain a supplemental medical policy along with a separate Part D - prescription drug policy. The minimum total expense for quality supplemental coverage is approximately $150-$175. Some supplemental programs can be in the $300+ a month range. You need a supplemental policy because what many people do not realize is that Medicare has no stop-loss limit for out-of-hospital physician services and large exposure for in-hospital as well.

Compare that with the MA program that replaces Medicare and any supplemental product with part D. Some MAs additionally offer worldwide coverage and better Skilled Nursing Facility coverage, etc. Growing knowledge about MAs among the Medicare-eligible population ensures increasing success for this product. The most interesting aspect to this situation is that Medicare (CMS) increasingly scrutinizes how some MA carriers function rather than encourage people to consider the MA alternative. Would it not make more sense for CMS to embrace the MA product so our senior population has more choice in how they purchase health care cost-protection? Time will tell, but I for one shout, "Yes!"

Stay healthy. Stay tuned. Get involved. Learn what is being done. Your life now does indeed depend upon it.

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