 | Dennis Manson
is director of Medicare sales for Preferred Health Systems. He has appeared on numerous local television shows and radio broadcasts to answer listeners’ questions about insurance and Medicare. Manson joined Preferred Health Systems in 1994 as manager of Medicare administration. He has been involved in the insurance industry for 16 years and the Medicare side of insurance for 14.
Incorporated in 1993, PHS was formed with the encouragement of area physicians, as well as St. Francis Regional Medical Center and St. Joseph Medical Center, and is now part of Via Christi Health System. PHS is the parent company of several individual companies. These companies develop and manage health benefit and insurance programs with a common mission to develop partnerships with health care providers to improve the health and well-being of its members and the communities it serves. |
Insurance
2001-10-01 17:30:00
Medicare... will it continue?
Question: What is happening with the Medicare + Choice program?
Answer: The Medicare + Choice (M+C) program was once a popular alternative to traditional Medicare for many individuals in certain areas of the country. This program allowed managed care plans such as HMOs to contract with Medicare to provide comprehensive services to HMO enrollees. The M+C program was seen as a sort of a "safety net" in the Medicare program for low-income and middle-class Medicare beneficiaries because it provided access to broader coverage at lower costs than would be otherwise available. Prescription drug coverage was very popular among the Medicare HMO enrollees.The M+C program recently, however, has encountered considerable turmoil. Numerous health plans stopped participating in the program in 1999 and 2000. The Balanced Budget Act of 1997 limited the payment to the M+C plans. This has forced many plans to reduce benefits and raise costs for Medicare enrollees, reduce the geographic area where they provide coverage, or altogether pull out of the program, leaving many individuals to find other coverage. It is anticipated that these declines in this program will continue for 2001.The most likely coverage category to be reduced by M+C plans is the prescription benefit. Prescription drugs were a major reason Medicare beneficiaries were attracted to Medicare HMOs in the first place. These reductions in the prescription drug benefits have only served to accentuate the limitations to the coverage of traditional Medicare. As Medicare beneficiaries look to replace the prescription drug coverage that they had through M+C plans, they are finding coverage through other sources to be either non-existent or very expensive.Question: Will Medicare ever cover prescription drugs?Answer: Prescription drug expenditures for Medicare beneficiaries who didn't live in a nursing home (or other institution) averaged $688 per person in 1996. These costs are certain to go up each year as the costs of prescription drugs continue to increase. According to the 1996 Medicare Current Beneficiary Survey, just over 50% of Medicare beneficiaries had prescription benefits throughout 1996. Nearly 30% had no coverage. The rest, roughly 20%, had coverage for prescription drugs only part of the year. Employer-sponsored health plans are the primary sources of prescription drug coverage. Seventy-seven percent of those that had retiree coverage through an employer had year-round prescription coverage. Almost 25% of individuals with a Medigap supplement policy had this coverage. Beneficiaries who have drug coverage use more prescription medications than those without coverage. Those that do not have coverage fill a third fewer prescriptions and spend 60 percent less on drugs.As the costs and need for prescription drugs continue to go up, so does the pressure on Congress to implement some sort of prescription drug coverage. This is happening at the same time that there is pressure to hold the costs on Medicare spending overall. Additionally, the initial costs projected by the government to provide a prescription drug benefit were too optimistic. Latest reports show that it will be much more expensive to provide this benefit than initially thought.Question: What are some of the possibilities of reforming Medicare?Answer: As Americans age 65 and older spend more and more on medical care and prescription drugs, the need for fixing the system is apparent. Medicare beneficiaries spend 22 percent of the income on health care, and that is estimated to rise to 30 percent in 2025. Many proposals have been floated on how to best reform the Medicare program. Only time will tell which ideas will galvanize into a practical solution to the challenges we face.In a recent report published by the Commonwealth Fund, four possible options for Medicare benefit reform were discussed. Option 1 would combine the Medicare Parts A and B deductibles into one deductible of $400, and add a "catastrophic ceiling" of $3,000 as the most any person would pay in a year for covered health care services. Option 2 would have a $200 deductible for each of Medicare Part A and Part B, reduce the Part B coinsurance to 10% (currently 20%), and have a $2,000 catastrophic ceiling. The third option would have only a Part B deductible of $200 (no Part A deductible), but increase the Medicare premium to $105 per month. The final option is to add prescription drug coverage to Medicare by paying for 50% of the costs and having a $2,500 catastrophic ceiling, and adding $26 to the monthly premium. The fourth option could be combined with any of the first three alternatives so each option would include prescription drug coverage. Please see the explanation below for a summary of the options.Four Options for Restructuring Medicare Coverage:Option 1: Basic catastrophic coverage and restructured deductible:• Combine the Part A and Part B deductibles into one annual deductible of $400.• $3,000 annual limit on beneficiary cost sharing and deductible expensesOption 2: Additional catastrophic coverage and lower cost-sharing rates:• Reduce Part A deductible to $200 per spell of illness• Increase the Part B deductible to $200• Reduce the coinsurance rate to 10 percent of approved charges• Add 10% coinsurance for home health• $2,000 annual limit on beneficiary cost-sharing and deductible expensesOption 3: Zero coinsurance and premium increase:• Eliminate Part A deductible and coinsurance, and Part B coinsurance• Increase Part B deductible to $200• Combined Part A and B premium of $105 per monthOption 4: Medicare prescription drug coverage:• Add coverage for 50% of costs of prescriptions• $2,500 limit on beneficiary cost-sharing of drugs• Add $26 to monthly premium• Lower the premium on a sliding scale for those below 150% of Federal poverty levelEach of these options are projected to reduce out-of-pocket spending for health care services for Medicare beneficiaries.Question: What do I need to know about Medicare supplement plans?Answer: The success of Medicare supplement plans can be clearly seen. Approximately 90% of Medicare beneficiaries have some sort of additional coverage to Medicare through the private sector, including Medicare supplement plans. By filling in the gaps left by Medicare, these plans have proven to be very popular and beneficial for consumers.Consumers should be very thorough in shopping for Medicare supplement plans. Although the benefit plans are standardized, there is a wide variation in premiums and customer service. Beneficiaries are able to save a considerable amount of premiums by thoroughly evaluating their choices in the market. In addition, it is a good idea to check on the rates of other plans every two years or so after purchasing a Medicare supplement plan.
