MEDICARE GETS A LOT of criticism these days. Some view it as socialized medicine. Others fret over the hospital trust fund, which covers Medicare Part A and is expected to run out of money by 2036.
Meanwhile, some policymakers want to cut back on traditional Medicare and promote privatization through Medicare Advantage plans, otherwise known as Part C. That reflects the philosophy that health care costs, access and quality will be improved if we obtain health care as we do other goods, by shopping for the best deal and choosing from among many competitors.
I vehemently disagree. Health care isn’t like obtaining and paying for other goods and services. The current system is working well.
Connie and I have been enrolled in Medicare since January 2010. Over the past 14 years, we’ve been admitted to both public and private hospitals, gone to labs and imaging centers, and seen both primary care physicians and specialists.
I’ve had one surgery since 2010, while Connie has received several types of surgery, both on an inpatient and outpatient basis. One procedure required her to continue treatments in Massachusetts while we were on vacation. She received highly specialized treatment for an eye injury when we self-referred to Wills Eye Hospital in Philadelphia. Over the past 14 years and through various treatments:
From this patient’s point of view, Medicare works very well. It’s not socialized medicine or government-run health care. Instead, it’s government-run, taxpayer-funded insurance.
This is not to say there are no problems. It’s a bureaucracy, after all, and its ability to control costs is limited. But it works for more than 60 million Americans like Connie and me.
No doubt many players in the health care system and some individual providers would not share my positive sentiments, especially regarding Medicare’s fees, rules, regulations and requirements. Yet similar issues are true of private insurance as well.
Medicare isn’t cheap, especially if you’re subject to the premium surcharges known as IRMAA, or income-related monthly adjustment amount, that apply to higher-income people. And, as noted earlier, I must buy a Medigap policy to supplement our Medicare coverage.
For many, the cost of health care coverage after age 65 will likely be higher than it was with their pre-retirement employer-funded coverage. Some try to save money with Medicare Advantage, or Part C. More than 50% of Medicare-eligible beneficiaries enroll in Part C. The attraction is lower out-of-pocket costs and added benefits. Maybe.
The question that often isn’t asked is, how can a Part C plan charge a modest or no premium, add extra benefits and still make money? It can’t—not without some significant differences from original Medicare. Part C plans employ various forms of managed care. Here are three examples:
Limited network. Unlike traditional Medicare, which allows you to visit any doctor or hospital accepting Medicare, Medicare Advantage plans often restrict your network to contracted providers. This might limit your choice of doctors and specialists.
Prior authorization. Certain Medicare Advantage plans require prior authorization before specific treatments or procedures are covered. This can lead to delays in care.
Less flexibility. Switching doctors or plans mid-year can be more cumbersome with Medicare Advantage compared to original Medicare.
While Medicare Advantage is popular and growing, behind the scenes there are issues. The Department of Justice and the Office of the Inspector General have been looking into Medicare Advantage plans, including concerns that some plans use prior authorization requirements to limit care and deny claims.
If you don’t mind playing by all the rules, a Medicare Advantage plan can be a good deal. Yet, having managed various forms of health plan during my career, including health maintenance organizations, I’m sticking with original Medicare. If you decide differently, take a close look at your choices before you enroll.
Richard Quinn blogs at QuinnsCommentary.net. Before retiring, Dick was a compensation and benefits executive. Follow him on Twitter @QuinnsComments and check out his earlier articles.
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Richard:
YOUR article is fantastic and does great job of describing the benefits of Traditional Medicare.
The mere fact that Medicare Advantage is being recommended by the government should be enough to cause people to know it is not in their best interests. Why do you think they are paying actors to sell this too you will falsehoods about “more benefits, cheaper costs, etc.?
The bottom line is this…THE ONLY PEOPLE THAT SHOULD BE ENROLLED IN MEDICARE PART C are those who truly cannot afford Traditional Medicare and Plan G premiums. (MY OPINION.)
Unless you are too poor for Traditional Medicare and the G Plan, then Medicare part C is your only option…but know this…in the long run, it will be more restrictive and more expensive.
Now are there going to be some exceptions based on states and coverages? Sure…but in general, MA will never be as comprehensive as Traditional Medicare with Plan G (and Medicare D for drugs.)
And starting in 2025, Plan D for Drugs, will be offering better premiums and coverage.
I had to learn by experience, but the price was cheap. Since I got a cancer diagnosis within my first months “free look” after age 65, I was still able to change my Medicare Advantage plan back to traditional medicare WITH a supplement–I chose the high deductible plan G supplement.
In hindsight, I forgot that insurance is for when you need it, not when you don’t. When I needed it, traditional medicare was so much better!
What did it cost me? One unreimbursed MRI at $600 and a totally ignored appeal. That was a cheap education, although I was a slow learner.
Interesting! I also got the ‘C’ diagnose and had an expensive operation but only had a hospital fee to pay for something but it was less than $100.
I have United Health Advantage and am very satisfied . . so far. I have an eye exam next month, I won’t have to give them my cash at all. So, I wonder what is best but will keep what I have.
“It’s not socialized medicine or government-run health care. Instead, it’s government-run, taxpayer-funded insurance.” Sounds like an issue with syntax, not the substance. Medicare IS socialized medicine, and thank Goodness for it! Celebrate what you have!
As a retired Primary care doc ( now on straight MC) I can offer the following thoughts based on years of being on the other end, caring for patients on Medicare Advantage.
In a nutshell MA plans are a disaster for MDs and patients. As noted the plans are paid more for more “complex” patients( doctors usually aren’t ) but CMS did a poor job defining complex; it basically relates to the total number of coded diagnoses.
That is the reason for the house visits from a MA nurse, to find any possible diagnosis and add many codes to otherwise simple things. low thyroid becomes an autoimmune disease, hypertension morphs into kidney and heart disease, etc. $$$ up go the payments the Feds are forced to pay to the plan, every year. This money has nothing to do with the care someone receives, it is gaming the system.
Some MA in places with great stable hospital system ( usually at least a duopoly) are OK as they have not choice to use the big University hospital for complex specialties. But it may not be the one you want.
Even in CT my MA patients were frequently told they could not go to Yale for heart surgery but had to go to a community hospital with a marginal record.
MA plans place a huge burden on MDs and staff who have to jump through hoops to get care plans approved, and many times they are denied without reason, by a clerk.
Unless you cannot possible afford traditional MC, stay away from MA. Once you sign up with a MA traditional Medicare will take you back during open enrollment, but the insurance companies running the supplement (paying for 20%) do not have to take you on or can charge you much higher premiums.
Good explanations. Thanks! That inability to try MA and then switch back without penalty (the supplemental is not avail. or is much higher) is the only thing that has kept us in MA. Congress: FIX THIS!
Just to be clear you can switch to back ton from Medicare Advantage to traditional plans during the first year of eligibility and have guaranteed issue at the premium level that would have been charged at initial enrollment in Medicare. This is a trial year.
After the first year you will most likely have to go through underwriting and either be denied by insurance companies or pay (significantly) higher premiums.
Here in the Rochester NY area, private health insurance is dominated by one non-profit, Excellus, with 73% of the market according to some estimates. The healthcare market is dominated by two non-profits (one is the University of Rochester Medical Center), which together run all of the hospitals in the region along with many other medical facilities.
My MA policy, from Excellus, includes all of the hospitals in the area and 99% of the physicians. I don’t need to get referrals for specialists. I don’t see that changing anytime soon because the healthcare providers need to work with Excellus and Excellus needs to work with them.
nice article RQ……we are lucky or unlucky depends on how you look at it to be covered by the VA because I am 100% P&T from Agent Orange exposure so both of us are covered for both Medical and Rx to which we pay $0…….if for some reason there is a problem with the VA to cover a Dr’s visit we just use Medicare and pay what ever Copay,,,minimal at best
Excellent article and start to stimulating discussion below. My wife and I started on a medicare advantage plan through Wisconsin Retirement Services when I retired and moved out of state to be near our daughter. I was able to apply my accumulated sick leave to cover the premium for approximately the first year. In the 5 years with UnitedHealthcare (ppo plan, not hmo plan) we have had only one physician group not accepting the coverage. (We have always asked before making an appointment). Medicare Advantage plans are noted for paying physicians and hospitals less than standard Medicare and this summer we were notified by both our regional hospital and primary care physician that they would no longer accept our coverage. (They both subsequently negotiated with UHC and are currently accepting again). We are currently in the process of moving to Medigap coverage and fortunately in good health so hoping the medical underwriting will not be too much of a problem.
We have been frequently contacted by UHC to have home visits but decline since we see our physician regularly. A recent WSJ article was posted about MA home visits: https://www.wsj.com/health/healthcare/medicare-insurers-extra-payments-72d09393
I’ve wondered why they keep pestering us for these home visits. Now I know. = waste
My experience is the same. I am much happier with the known costs of original Medicare with a Plan G Supplemental. I spend right at $1000 per month total for my spouse and me in addition to the approximate $500 annually we have in co-pays for Plan G and Part D prescription is included in that amount. I do have some IRMAA at the first tier to consider but based on our income there does not seem to be an easy way to eliminate that tax. My pain is the lack of a good Dental, Vision, and Hearing plan. It Seems like I spend a considerable amount there per year for two cleanings each and a set of eyeglasses each and it is looking like I will lay out at least $1000 this year for hearing aids. I am happy with my Original Medicare but if anyone knows of a good way to navigate Dental, Vision, and Hearing please let me know
Richard, There was a great HD article and discussion on dealing with dental and vision costs when in traditional medicare. It is at: https://humbledollar.com/2023/08/what-medicare-misses/
Sure, it’s called a MA plan.
a good way to navigate? Socialized medicine. the same coverage for ALL citizens, including Congress, would produce tremendous results.
Whatever Medigap (supplement) insurance company you pick for your Medigap plan check to see how many “closed block of business / closed risk pool” (deadpool) policies the company has.
This is done because the current book of business have people who have become older and therefore have more illnesses meaning more claims (higher loss ratio). Insurance companies close that book and raise the rates to cover the increasing losses. Then, they open a new book with younger, healthier folks and charge a lower premium do to lower claims ratios. After a couple of years, rinse and repeat.
Good analysis and I completely agree. We are recently (16 months ) retired and started using Medicare Part B along with a GHI Emblem health supplement. I have to say that we have had excellent coverage with every doctor and medical facility we’ve used previously gladly accepting the new insurance coverage. We rarely have a co-pay that we are responsible for.
We filed the SS-44 form for “Change of Life Event” immediately upon retirement and have had most of our initial IRMAA charges eliminated.
Additionally (and at the risk of being lynched here), my wife’s Municipal Government retirement benefits cover both of us and reimburses our Medicare Part B premiums on an annual basis. Absolutely no complaints about Medicare here.
CBS News Money Watch just reported this:
Medicare Advantage plans reaped $4.2 billion in extra payments last year by making home visits to senior citizens who may not have received treatment for serious health issues, a new government report has found.
The report, issued by the Office of Inspector General for the Department of Health and Human Services, flags concerns with so-called health risk assessments, or HRAs, which are home visits used to diagnose Medicare enrollees for serious health issues.
Because senior citizens who suffer from major health issues can trigger higher risk-adjusted payments for Medicare Advantage plans, the agency wanted to determine whether these HRAs are misused, with taxpayers footing the bill. Roughly half of the 66 million seniors enrolled in Medicare are also enrolled in a Medicare Advantage plan, which are offered by private insurers such as UnitedHealthcare and Humana.
The analysis said UnitedHealthcare collected $3.7 billion of risk-adjusted payments last year, making it the biggest benefactor of the practice, followed by Humana, with $1.7 billion.
UnitedHealthcare took issue with the study.
I think that I would choose Trad. Medicare if I could do-over. But there is no (reasonable) route once you choose MA.
I had a UH MA plan for 2023 (am back on Medicare plus Medigap) and UH bugged me multiple times about an in-house visit. Telling them to stop calling took a while to work. No way was I letting a spy from UH visit, nor get a medical assessment from someone I hadn’t chosen.
Federal law allows Medigap insurers to use medical underwriting to either deny Medicare beneficiaries a policy or charge higher premiums outside of guaranteed issue periods. Federal law also does not require Medigap insurers to issue Medigap policies to people who choose to disenroll from a Medicare Advantage plan, except under limited circumstances. Kind of a Hotel California outcome that was not mentioned in your article.
Yes, the ACA did away with the pre-exiting condition issue for non-seniors, but not for seniors.
Okay, that’s true and designed to limit adverse selection which then leads to higher premiums. That is why choices are a bad idea, everyone seeks to get the best deal for them at the time and when circumstances change they want a new best deal – just human nature.
I enjoyed this podcast / article which also provides a broad view on original vs advantage.
https://www.morningstar.com/personal-finance/phil-moeller-road-map-navigating-medicare
Great post, and I agree 100% about the benefits of traditional Medicare over MA plans!
Question: As I have been looking on medicare.gov for part D insurance for 2025, the best one I can find has $0 monthly premiums and $0 medication cost. How can that company offer such a plan? (not complaining, just an observation)
Often those policies are less effective if you need high cost medication, esp if it’s a permanent maintenance situation. If an insurer can attract a large number of excellent risks they can ratchet down the price and still make a profit.
Thanks, Scott. I am fortunate that my 3 medications are all classified into tier 1.
Dave, you should check out this thread:
https://humbledollar.com/forum/wellcare-for-part-d-by-andrew-forsythe/
Thanks, Jonathan, for that reference. I remember seeing that in the recent past, but had forgotten about it before my post on Richard’s article. The plan I am looking at IS one from WellCare.
Both our d premiums dropped to $0 last year. Medicare still pays the drug company. Your cost of drugs just depends on what they are; a few of ours are $0, but most are not.
Thanks, Dan. I am fortunate that my 3 medications are all classified into tier 1.
That’s a good question. I’d look closely at the details it’s not logical.
This may be a factor:
Voluntary Part D Premium Stabilization Demonstration
Overview
CMS is conducting a voluntary demonstration to test whether additional premium stabilization and revised risk corridors for stand-alone prescription drug plans (PDPs) increase the efficiency and economy of services under the Medicare Part D program as the benefit improvements and changes to plan liability for beneficiary costs under the IRA go into effect. The demonstration consists of three elements.
Thanks. That’s interesting reading.
Agreed. I looked at all the info on medicare.gov and then went to the plans website. Couldn’t find anything “suspect” with the plan, and the star rating was pretty good, so I called and talked to a very helpful representative. She entered my 3 tier 1 meds, confirmed both the $0 costs, so I signed up. I will keep looking to make sure things don’t change between now and the end of open enrollment.
Good summary, Dick. My wife and I are retired and have been on traditional medicare with a supplement for over six years. We appreciate the freedom to choose our providers, and have found the premiums and out of pocket expenses to be affordable. I don’t know how our long term total costs from this choice compare with what they would have been had we chosen an Advantage plan, but I have “peace of mind” with our choice.
Richard,
Excellent analysis of a very complex situation.
When it was time for us to enroll in Medicare we asked one of our cousins who had been a CPA with various insurance companies for advice.
He chuckled.
And then gave us the card of The Medicare Advisory Agency he and his wife used.
Even years ago it was so complex that a CPA with decades of insurance company experience needed help in choosing the most appropriate coverage option.
Dick,
Would you mind sharing what you pay for Medigap Plan G and your Part D?
Medigap is $250 and $271, high because we were forced into Medigap by former employer and premium is age based. Rx coverage is $18.20 in 2025 a decrease from $64.80 in 2024 partly because they increased the deductible and changed some drugs from co-pay to coinsurance.
The cost of Medigap varies not only by age, but by where you live. An AARP/UH Plan G costs more in Florida than it does in North Carolina.
The cost of drug coverage is all over the place this year because of the $2,000 cap on covered drugs. There have been significant changes to formularies, too.
If one wants to really get into the weeds of Medigap plans you should go to the KFF website and read a recently published article entitled:
Key Facts About Medigap Enrollment and Premiums for Medicare Beneficiaries
It’s very enlightening for retired folk with plenty of time on their hands!
Thanks for sharing. So, it costs about $3,300 per year to get that flexibility of staying on original Medicare. The average SS check for 2024 is about $1780 with a max of $3822. If someone is looking at Medicare Advantage for free or Medigap costing one to two months of their SS payments, I can see why they would go with the Advantage plan.
Jim, your dollar amounts only compare the cost of annual premiums, which ignores the fact that after paying the premiums, Dick pays only the Part B deductible of $240 under Plan G and nothing else. Someone on an Advantage plan avoids the annual premiums, but pays considerably more — in copays, coinsurance, time, and often frustration — as they attempt to access healthcare that Advantage companies often deny. The Wall Street Journal ran an article today, and is doing an ongoing expose, on insurer abuses in the Advantage system.
I doubt that Dick only pays his premiums and Part B deductible. For a starter, very few Part D prescription plans, if any, cover everything. And then there are dental and eye care that isn’t covered by Medicare or Medigap policies.
Advantage plans are not all bad, no matter what you see in the press. Remember that horror stories about Advantage plans sell more papers and draw more clicks. Success stories don’t sell.
Some Advantage plans have little or no copays and coinsurance. I have family members whose only source of income is their SS benefits, and they all have an Advantage plan with no premiums. One big plus, they get dental/optical care that they otherwise would forgo. One just got a nice set of implants! Recently lost one family member after a long battle with cancer during which we had no issues getting care with less than $1,000 out of pocket over 18 months from an Advantage plan.
Interesting point in a recent KFF article,
”Medicare. The Medicare Payment Advisory Commission (MedPAC) reports that (Medicare Advantage) plans receive payments from CMS that are 122% of spending for similar beneficiaries in traditional Medicare, on average, translating to an estimated $83 billion in higher spending in 2024.
So why are some politicians pushing to force all Medicare recipients into Advantage plans?
Could it possibly be the campaign contributions from insurance companies?
It would be interesting to correlate the Congress people pushing advantage plans and those receiving campaign contributions from those plans. Judging by the amount of advertising Advantage plans do, it would not surprise me in the least that they would try to influence Congress as well as the public.
Add the great deal of money spent on lobbyists, plus the attitude shared by some politicians that anything run by the government is by definition “bad”.
You really should stick with the financial pros and cons of various approaches to Medicare, the purpose of Humble Dollar, and take your conspiracy theories elsewhere.
Thanks so much, Dick, for confirming my decision to move from an Advantage plan to original Medicare. I’m allowed to do this because my Advantage plan is being discontinued and I received a letter verifying my right to choose original Medicare. I was a little surprised when I told my insurance agent my decision and she said “That’s what I was thinking you should do.” She will earn a lower commission so I appreciated her honesty in getting what’s best for me long term. Thank you to everyone else here who has contributed articles about Medicare choices. Here is where I’ve done my research. 🙏🏻
I think I hope this happens to us. Cannot leave MA now because I’m sure the Supplemental would be WAY too high. Since you did not choose voluntarily to leave your MA company, is Medicare treating you like a new 65-year old? Letting you choose the Supplemental ins. company with no increased cost based on your medical history?
Good analysis. As you probably know, there are people that tend to always choose lower initial costs when shopping for insurance, starting with the menu of choices for their workplace plans. This behavior tends to carry over into their Medicare choice. I understand it–healthy people often have a hard time imagining an illness. Having seen it from the healthcare provider side, when my time comes, I’m choosing regular Medicare.
Dick, thanks for this timely read. Those soon becoming eligible should pay special attention to your cautionary tale.
We have been on Medicare and plan G for 7 years now. It is the best insurance i have had since bygone days of $100 deductible group plans.
It would be nice to have free coverage for teeth and eyes….. just kidding about the free part.
Why are eyes and teeth not part of your body? All medical problems should fall under “health insurance”, ie Medicare.
Thank you for being a voice of reason. Your article clearly addresses the issues with Medicare Advantage plans. Not only does the plan limit access to doctors but physicians are starting to feel the effects of the increased paperwork for prior authorizations and will not take those plans, further limiting patient access. You would think the fact that a broker who “sells” a patient a Medicare Advantage plan gets hundreds of dollars where if they “sell” that same patient a Medigap plan they get around $50 would be a sign that something isn’t right.
We went on Medicare this year. So far, our experience has been similar to yours. We are paying more than before in premiums, but it is still affordable. We also saved in a HSA to pay for things like vision and dental. I know the premiums will go up. I like knowing we mostly have fixed costs with our premiums for parts B, G and the $240 deductible, which I know will also go up. Chris
Two points:
1) You can use your HSA funds to pay your part B federal, but NOT supplement premiums.
2) HSA funds that are inherited must be distributed once the estate is settled. Your beneficiaries are not allowed to spread over 10 years like other investments.
With this in mind we are utilizing our HSA funds to pay our federal part B premiums in addition to any out of pocket expenses such as dental and vision.
Is there no one in Congress willing to fix this complicated crap?
Thank you, David. I knew these things but others may not. We know that whichever of us outlives the other needs to spend down the HSA. Chris