Growing old, as the saying goes, is not for sissies. One reason may be the dizzying array of choices senior citizens face annually regarding Medicare, Medigap (Medicare supplemental policies), Medicare Part D (prescription drug plans), and Medicare Advantage (MA) privatized insurance plans. If you thought that at age 65 you simply sign up for Medicare and that’s that, think again. The days of uncomplicated Medicare are a thing of the past. If this is news to you, obviously you’re not a senior citizen or you would already be aware of the complexities introduced into the system in the last several years. Pay attention. Time flies, and you’ll be faced with these choices before you know it. If your eyes begin to glaze over, take a few deep breaths and persevere.

The History

At its inception, Medicare was a relatively simple program. Signed into law by President Lyndon B. Johnson on July 30, 1965, Medicare provided health care coverage for people age 65 and older or those under 65 who are disabled or otherwise qualify. Original Medicare consisted of Part A (hospital and related care) and Part B (doctors), with benefits starting in June, 1966. The system’s administration fell under the purview of the Department of Health, Education, and Welfare, now the Department of Health and Human Services, and its Centers for Medicare and Medicaid Services (CMS).

In 1997, the program was amended to include Medicare Part C, Medicare Advantage (MA) plans, which allowed the option of choosing private health insurance plans in lieu of Part A and Part B. Of course, this option requires dealing with insurance companies whose main concern is their bottom line.

The Medicare Modernization Act of 2003 added several complications. The Medicare Modernization Act (an Orwellian frame if ever there was one) should more accurately have been called the Medicare Complicating, Privatizing, and Dismantling Act. Passing the House by a 216-215 vote (we pin this one on our Congressman, Jim Gerlach R- PA 6) and the Senate by a wider margin, the legislation threw senior citizens to the insurance company wolves while the wolves themselves became the beneficiaries of taxpayer dollars in the form of government subsidies to companies providing Medicare Advantage (MA) plans and allowing gaps in coverage to those providing prescription policies. Furthermore, any of these plans can pack up and leave town at the end of the year if they’re not raking in enough money, and some have done just that.

The late Pete Archey, formerly with the Berks County (PA) Office of Aging (BCOA) and the Pennsylvania Health Care Cost Containment Council, was the ‘go to guy’ on health care related issues. We remember him describing this legislation as the worst ever. Phyllis Dessel of BCOA recalled Archey remarking that the members of Congress who voted for the Medicare Modernization Act must be orphans – they could not possibly inflict such a complex, complicated, callous system on their loved ones. He surmised that the legislators themselves didn’t understand the legislation. Then again, perhaps they understood it only too well, their allegiance lying with the insurance industry, not Grandma and Grandpa.

Two villains in the legislation take the prize as the most egregious bastardizers of original Medicare – government subsidizing privatized MA plans and introducing the not-so-user-friendly Medicare Part D prescription drug plan, a financial gift to pharmaceutical companies which had a hand in writing the legislation that prevents bulk purchasing of drugs and negotiating their prices.

Providing government subsidies to insurance companies functions as a magnet to lure Medicare enrollees into private Medicare Advantage plans. These Medicare replacement products are subsidized, enabling insurance companies to charge lower premiums to individuals while our tax dollars make up the difference. MA plans contain many loopholes and pitfalls, however. This appears to be step one in an attempt to privatize the whole Medicare system, driving a nail into the coffin of what began as a truly altruistic program.

Medicare Part D prescription plans are designed and administered by private health insurance companies. Typical of private health insurance, prescription coverage is not standardized – each plan picks and chooses what drugs they will cover and to what extent they will be covered. The level of complexity is mind-boggling as is the financial catastrophe visited on many enrollees. Hammer another nail in the coffin.

The Process

That’s the history in a nutshell. Now let’s examine the process of navigating the system if you’re a senior citizen. (This information is not meant to be a substitute for advice you’d get from a qualified Medicare counselor.) Do you want original Medicare plus a Medigap supplemental plan plus a stand alone drug plan OR do you want a privatized Medicare Advantage plan? To begin with, there are countless Medigap supplemental choices and 54 MA plans from which to choose (in Berks County). The Medigap plans are standardized (all plans offer the same coverage) while the MA plans are not. The MA plans require the consumer to wade through the provisions of each of the 54 different plans, the provisions of which can change every year. The MA plans are regional – you cannot go out of network for care. A co-pay is required for every doctor visit.

There are 57 Medicare Part D prescription plan choices (in Berks County). Participation in Part D is voluntary. However, for those considering opting out of this coverage, Phyllis Dessel of BCOA offers a cautionary note, “You need a drug plan for the same reason you need car and homeowner’s insurance – you hope you never need it, but if/when you do, you’re glad to have it.” There’s another thing to consider. If you opt not to sign up when you’re eligible and decide to join later, there’s a penalty – a higher premium.

It gets better. Medicare Part D is more fun than a barrel of monkeys, especially when it comes to the ‘donut hole’. That’s when you reach the gap in coverage, and the full retail cost of your medications comes out of your pocket. What many may not know is that you reach the donut hole amount based on the retail cost of your drugs, not on the (lower) amount you’ve been paying. Each of the 57 plans in Berks sets its own retail prices for drugs. As a rule, you should choose the plan that has the lowest retail price for your drug – not the easiest choice if you are taking multiple drugs. One plan’s cost could be lower for drug A, another plan’s lower for drug B, and so on. You make this sometimes difficult decision based on lowest retail price for two reasons: 1) It takes longer to reach the donut hole. 2) It’s cheaper when you reach the donut hole and you’re paying full retail price for your drugs.

Choosing the most expensive drug plan does not guarantee the best coverage. It may have no deductibles (great!), but it may not cover the donut hole at all, leaving you with possibly thousands in out-of-pocket costs (not so great). Who among us could possibly think this legislation was written with the best interests of senior citizens in mind?

If you’re the adventurous (and analytical) sort, you can gather reams of information, park yourself in front of your computer, analyze your apples and oranges, perhaps produce a spreadsheet with all the details, and decide which options make the most sense in your particular situation. A better idea may be to seek assistance from impartial counselors, employees and volunteers from BCOA, for example, who are familiar with the ins and outs of the system. Insurance agents may also be able to assist you, but they are hardly impartial. To clarify the process for us, we contacted the aforementioned Phyllis Dessel, Quality Assurance Officer, BCOA. Every year Dessel helps hundreds of senior citizens make sense of their choices. She has the qualities necessary for such a task – warmth, patience, and knowledge.

Dessel explained that senior citizens come to her office armed with mountains of insurance company marketing materials they’ve received in the mail, suggestions from friends and family about the plans they prefer, and a level of comfort with the familiar name of an insurance company or organization that sells policies. None of these things, necessarily, point to the optimum choice for enrollees. Dessel said, “I look at what’s covered and the cost. My clients often look at names of companies and familiarity.” We are certainly grateful for the generous gift of her time in sharing with us the qualifiers, nuances, and other features of the Medicare system. The enormity of the task of making sense of them all became clear.

Dessel’s concerns rest on finding the most appropriate coverage and the best bang for the buck. Though she has her own ideas about how to improve the system, she avoids getting caught up in the politics of reform.

But we don’t!

The Solution

To return Medicare to user-friendliness and to remove the corporate welfare that has insinuated itself into the system, we must remove the insurance company middlemen and their profit motive from the equation. They are an unnecessary and costly bureaucratic layer. This will eliminate privatized MA accounts and their costly government subsidies, saving $15 billion annually. It will also eliminate Part D prescription plans through private insurers – no more donut holes. We must replace MA plans and Part D with a single set of comprehensive (all-inclusive) benefits. A uniform single standard of superior care for all enrollees is all that is required. Fund and administer it through the Department of Health and Human Services’ CMS.

Call the reform the Medicare Simplification Act, the ultimate in simplicity and efficiency. Better yet, expand it to cover everyone with one ‘group’ plan. The risk pool (those covered) is larger, and therefore the program is more efficient. This efficiency alone would save $350 billion annually.

Let’s turn A-maze-ing Medicare into Amazing Medicare!