Why Medicare Advantage Plans May Be Bad for Patients and Taxpayers

Medicare Advantage (MA) plans have been promoted as a private-sector solution to traditional Medicare’s challenges. While many beneficiaries enjoy the additional benefits and lower out-of-pocket costs that some of these plans offer, it is essential to understand the potential drawbacks of Medicare Advantage from the perspective of patients and taxpayers.

1. Higher Costs for Taxpayers

Medicare Advantage plans receive payments from the federal government to provide coverage for enrolled beneficiaries. However, multiple studies have shown that the government pays MA plans more per enrollee than it would cost to cover these beneficiaries through traditional Medicare. Overpayments to MA plans increase costs for taxpayers without necessarily delivering better care.

Real Medicare pays bills when they’re presented. Medicare Advantage insurance companies, on the other hand, get a fixed dollar amount every year for each of the people enrolled in their programs, regardless of how much they spent on each customer.

As a result, Medicare Advantage programs make the most significant profits for their CEOs and shareholders when they actively refuse to pay for care, which happens frequently. It’s a safe bet that nearly 100 percent of the people who sign up for Advantage programs don’t know this and don’t know how badly screwed they could be if they get seriously ill.

2. Limitations on Provider Networks

Unlike traditional Medicare, which allows beneficiaries to see almost any healthcare provider, MA plans often have a restricted network of doctors, hospitals, and other providers. This can limit patients’ choice and access, potentially leading to longer travel times, waiting periods, and the inability to see preferred and trusted physicians.

3. Opaque and Complex Benefit Structures

MA plans often come with intricate benefit designs, varying co-pays, and deductibles that can confuse beneficiaries. It can be challenging for patients to compare programs and understand their actual costs, potentially leading to unexpected out-of-pocket expenses.

4. Potential for Denial of Services

Some critics argue that because MA plans operate for profit, there’s an inherent incentive to deny services or referrals to specialists to save money. While this doesn’t represent all MA plans or situations, it’s a concern that might affect patient care.

5. Limited Mobility and Regional Disparities

While traditional Medicare is universally accepted across the U.S., MA plans might not provide the same coverage or network outside the plan’s service area. This limitation can be a significant problem for beneficiaries who travel or split their time between regions. Additionally, not all areas, especially rural parts, have a wide variety of MA plans, leading to disparities in choice and benefits.

6. Hidden Costs

While many MA plans offer $0 premiums, it doesn’t mean they are free. The costs are often shifted through higher deductibles, co-pays, and other out-of-pocket expenses. Moreover, taxpayers are still footing the bill through the government’s higher payments to these plans.

7. Impact on Traditional Medicare

The overpayments to MA plans indirectly strain the traditional Medicare system. If too many resources are diverted towards supporting MA plans due to their higher costs, it could jeopardize the sustainability of the broader Medicare system, affecting millions of beneficiaries.
While Medicare Advantage plans might be the right choice for some individuals, it’s crucial to understand their broader implications on healthcare access, costs, and the sustainability of the Medicare system. As always, it’s essential for beneficiaries to be well-informed and for policymakers to ensure that Medicare resources are used efficiently and equitably.

 The overcharges in Medicare Advantage plans cost Americans over $140 billion a year: more than the entire budget for the Medicare Part B or Part D programs. These ripoffs — that our federal government seems to have no interest in stopping — are draining the Medicare trust fund while ensnaring gullible seniors in private insurance programs where they’re often denied life-saving care.

By one estimate, and based on 2022 spending, Medicare Advantage overcharges taxpayers by a minimum of 22% or $88 billion per year, potentially by up to 35% or $140 billion. By comparison, Part B premiums in 2022 totaled approximately $131 billion, and overall federal spending on Part D drug benefits cost roughly $126 billion. Either of these — or other crucial aspects of Medicare and Medicaid — could be funded entirely by eliminating overcharges in the Medicare Advantage program.

Some hospitals and doctor groups nationwide are beginning to refuse to take Medicare Advantage patients. California-based Scripps Health, for example, cares for around 30,000 people on Medicare Advantage and recently notified all of them that Scripps will no longer offer medical services to them unless they pay out-of-pocket or revert back to actual Medicare.

They made this decision because Medicare Advantage insurance companies turned down over $75 million worth of services and procedures their physicians had recommended to their patients. In many cases, Scripps had already provided the care and is now stuck with the bills the Advantage companies refuse to pay.