Medicare Disadvantage

As blog readers may know, so-called Medicare Advantage plans have been rapidly taking over the Medicare marketplace, as the chart shows. More than half of Medicare recipients now have such plans, which are widely promoted to older folks through TV ads, mailers, etc. Essentially, Medicare Advantage is a privatization of Medicare. (Those who call for "Medicare for All," meaning a single-payer public system, don't seem to kow that Medicare is more than half privatized.)

Medicare Advantage plans effectively are supplanting traditional Medicare with wraparound private insurance to cover things that Medicare doesn't or that still leave significant expenses for patients. They promise enrollees that they will provide everything that Medicare does along with extras such a gym memberships.

As the chart shows, the rapid growth of Medicare Advantage has continued regardless of which party is in control of Congress or the presidency.

Why has Medicare Advantage grown so fast, given that it is targeted to older and disabled people who are most likely to have big medical expenses? Why do private insurance carriers find it so attractive that they actively compete for new clients? Medicare pays the private carriers a risk-adjusted premium for each enrollee. Experts who have looked at this matter believe the federal government is overpaying the carriers for the risks and expenses they take over. They also have narrower networks of health providers than the traditional arrangement does. As a result, they are typically cheaper than the traditional Medicare plus wraparound options.

Some of the cheapness of Medicare Advantage plans may also arise from low-balling to attract a larger market share.

As blog readers may know, at one point there seemed to be a push at UCOP to put all retirees into a Medicare Advantage plan to reduce costs. This effort was halted by resistance. But Medicare Advantage is offered as the cheapest option to UC retirees.

Unfortunately, the party may be ending as relatively few carriers dominate the market and now begin to clash with healthcare providers over rates the carriers will pay for services. The San Diego Union-Tribune is reporting that a major provider in that area is now refusing to continue servicing Medicare Advantage patients:

Scripps Health confirmed Tuesday that its clinic and coastal medical groups — which have been the provider’s most popular options for many patients — will stop participating in Medicare Advantage plans starting Jan. 1, 2024. The move, which first surfaced publicly in early August, has been estimated to affect about 32,000 San Diego County seniors enrolled in a range of plans from organizations such as SCAN, Anthem, Alignment, MediBlue, Blue Shield, Health Net and United Healthcare. Rumored for months, Chris Van Gorder, Scripps’ chief executive officer, confirmed the decision Tuesday. This, the executive said, is not a negotiating tactic...

Source: https://www.sandiegouniontribune.com/news/health/story/2023-09-26/most-popular-scripps-health-groups-to-exit-medicare-advantage-at-end-of-year-cutting-off-32-000-patients.

Of course, it is possible that despite the CEO's remarks, it is a negotiating tactic and a deal will be struck. Even so, if it isn't struck soon, open enrollment will be a problem since you can't offer an option that isn't available. Anyone choosing Medicare Advantage and relies on Scripps Health currently will not know whether that relationship will be available in 2024.

We have word that similar issues, i.e., health providers refusing Medicare Advantage, may be occurring in other areas of California. In short, the Medicare Advantage party may be ending for UC retirees, dependents, and survivors.

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Source of chart: https://www.kff.org/medicare/issue-brief/medicare-advantage-in-2023-enrollment-update-and-key-trends/.