• Premium support proposal and critique: Objection 4, complexity

    This post is part of a series. If you haven’t read the prior posts in the series, you really should. The introduction explains what I’m doing and links to all posts to date.

    Medicare is already very complex, some say too complex. There is research that suggests beneficiaries have difficulty making good choices among the myriad of available plans. Many on Medicare lack the cognitive ability to do the work to do so. Not all of them have children or spouses who can help. Thus, some suggest the right thing to do is to simplify Medicare, not make it more (or even keep it as) complex.

    This is not an argument against private plans, per se, but it is one for keeping traditional Medicare as a “safe haven” for those who can’t easily navigate the process of selecting something else. It’s also an argument for some degree of standardization to simplify the selection process, something that would also enhance competition, though reduce innovation (both good innovation, satisfying demand, and bad innovation, in ways that just skew risk selection).

    This argument also relates to the feeling among some that private plans will take advantage of beneficiaries. If plans make obtaining care difficult in some way, some beneficiaries could lose access to necessary care.

    Finally, there are ways to help beneficiaries navigate plan choices and obtain the care they need. For example, additional resources could be spent on counselors available by phone or in the community. That may not be a substitute for simplifying plan options, but it makes a good complement.

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    • I recently attempted to go through the Medigap selection process with my Mom. She has a Medigap policy with the Blues of PA and a drug (Part D) plan.
      I used the tool on the Medicare web site which is as good as it can be, I guess, but the whole process was very confusing. (I am a doctor and a health information systems consultant so I have some domain expertise.)
      There is a confusing array about 20 “standard” Medigap policies (lettered A through something). However, my Mom had “Plan H” which I guess is a way to offer non-standard plans since it didn’t come up on the list. There is a confusing array of deductibles and exclusions with the different plans which are only useful and meaningful in retrospect (after you have been screwed by the insurance company).
      The drug benefit (part D) was even more complex. I entered all 8 of my Mom’s medications and it gave me a list of about 50 plans with some costing and exclusion information but there was no clear way to figure out which was the best for my Mom.
      In the end, we just decided to stay with the plan she has although there many have been a better plan for her… I just couldn’t figure it out.
      All of this is a long way of saying, Yes, it is too confusing and this makes it very easy for the insurance companies to game the system.
      There should be only a very small number of standard plans (no Plan H) with clear benefits and exclusions.
      I think “innovation” and “free choice” in this context are just smoke screens for keeping people confused and costing them more money.

    • I was responsible for a Medicare+Choice (predecessor to Medicare Advantage) business some years ago and therefore have some personal experience. Regarding Mark Spohr’s comment above: indeed the current system is complex. Before Part D (drugs) there were Medicare supplement plans A-J. With the advent of Part D those plans that principally offered drug coverage were dropped (H?) although existing enrollees may have been grandfathered. I suspect inertia is a governing factor for many seniors after initial enrollment.
      The key to our M+C business model was utilization management. We felt our provider contracts were as good as any in the market and that to succeed we needed to quickly determine health status and engage with new members to manage medications, ADL’s and chronic disease. By doing so we felt that hospital admission, length of stay and reduced readmission rates would allow us to compete. We used Nurse Case Managers, hospitalists and every other means to manage our sickest members. I suspect each of the national private plans today is doing all this and more. This is where i believe private insurance plans can compete with an un-managed FFS TM or even one with some other payment system. The key is coordinated care at the individual member/patient level.