theabcsofmedicare

Three Leftists Sort of Say Public Medicare Advantage More Efficient than Traditional Medicare

Three left-wing entrepreneurs -- who have "invested" in a 2015 start-up that wants to take advantage of the Obama administration's "big data" initiatives -- have found that public Part C Medicare Advantage plans are more "efficient" than traditional Medicare. Whether efficiency is even a good way to measure health insurance is debatable but the lefties conclude (see Note)

"... our results suggest that there are large efficiencies from ensuring that at least some managed care option is available to (Medicare) enrollees (in all counties)."

After reaching that conclusion however they never answer the question in the title of their research (see image): "Is Medicare Advantage More Efficient than Traditional Medicare?" The three leftists are long time critics of what they call -- incorrectly -- private Medicare. So it is interesting that they have reached these conclusions and actually published them. Maybe it's something to do with becoming capitalists.

Still there are only a few reasons to choose a public Part C Medicare health plan (not all public Part C plans use the brand Medicare Advantage and many are not even based on the Medicare Advantage part of the Part C program) and its efficiency is not one of them. The reasons are:

• My preferred/favorite/nearest provider or providers accept a public Part C health plan I can join
• I am not risk averse and I do not want the almost total financial protection of private Medigap insurance (but I understand that Medigap is almost always much more expensive upfront and out of pocket ongoing than a Part C plan)
• I understand all the rules of health maintenance organizations (HMOs) and like networks (usually you have been in one for 30-40 years and have no problems with the HMO approach)

The plurality of people on Medicare get a private group retiree plan from a former employer (but increasingly these group retiree plans are also HMOs or HMO-like). Part C is the second most popular choice. Private Medigap plans are the third most likely choice. About 10% or so of Medicare beneficiaries are on Medicaid and have no need for a private retiree or Medigap plan or public Part C plan.

Note: The quote is from a summary of the entrepreneurs' article published in a free National Bureau of Economic Research newsletter; the actual research is behind a pay wall.

Why Charles Shumer Is Like Abraham in Genesis When It Comes to Medicare

I have been bothered by some statistics in an article by Sam Wood on philly.com concerning how many people did not sign up for Part B when first eligible and therefore pay a penalty on top of their Part B premium once they do sign up. Wood dug up the number from the Congressional Research Service. It was 750,000 in 2015 and this group is paying on average a 29% penalty meaning they on average sign up 2-3 years later than they should have.

That 750,000 equals a little more than 1% of the people on Medicare. So 1% of people in any group do dumb things, you say; end of subject. But the 750,000 actually represents 20%-50% of the people who could potentially be affected by the penalty because most of us have to sign up for Part B in order to get our supplement. Even if we did not know the rule, we would find out about it long before we would have to pay a penalty.

So who falls through that crack since almost everyone on Medicare is effectively forced to get a supplement. The answer -- apparently -- is that most of the 750,000 take the risk of paying a Part B penalty somewhere in the future on purpose:

• Around 1% of all the people on Medicare are also on VA and have no need for B in general.. but they will pay later if they change their mind – About 10,000 of the people in the VA system on Medicare pass on Part B
• Another 1% of the people on Medicare live outside the U.S. and have no need for Part B in general (in fact, all of Medicare itself  is no good to them outside the U.S. period unless they travel back and forth)… but they will pay later if they change their mind and want to leave the Riviera and come home – about 10,000 make this decision
• Around 40% of us on Medicare have private group retiree insurance as a supplement (instead of public Part C or private Medigap) and although most of those in this cohort are required to have Part B by former employers (e.g., the state of Massachusetts), Federal retirees and some others are not. So many in this cohort often intentionally forgo Part B knowing that some day for some reason they may have to pay a penalty; that decision is not accidental, particularly among those in the Federal Employee Health Plan system – about 200,000 intentionally take the risk
• Some people on Medicare do not join B when they should because they are high income (but not working or not working for a company that provides employer insurance) and would need to pay a very large surtax to get Part B. But then as their income comes down as planned by a financial manager (maybe after 3 years), paying the standard Part B premium plus a 30% penalty average for the rest of their lives makes more financial sense than paying the huge standard Part B premium and surtax for three years – maybe 50,000 (these people are typically much older than 65 when first eligible so "rest of their lives" is not an actuarially big number)
• Around 5% of the people on Medicare (but this number is decreasing rapidly as the cohort dies off) never joined Medicare Part B because of the initial rules of their group (typically local governments) but later the  group retirement plan decided to pay the penalty for them because that is a better deal for the group's finances than carrying the retirees with the younger people in the group – also maybe 50,000 or so but could be higher
• Around 10% of us in total (5,500,500) have Medicaid and whether or not we do not have Part B accidentally or intentionally is irrelevant because we do not pay the penalty – maybe there are 200,000 of us in this group
• Some people ARE dumb when it comes to financial management and do not make good decisions  – so maybe of the 750,000 of us paying the Part B penalty, 200,000 of us ARE dumb

That means the percent that accidentally do not sign up for Part B when they should is more like one third of one percent of all the people on Medicare, not 1%.

OK, what does this have to do with Charles Shumer, Abraham, and Genesis? Shumer wants to pass a law that says everyone will get mailed a letter when they are 64 years and 6 months old reminding them to think about this issue even though 99.7% of us already do. Then they will get another letter three months closer to their birthday. This letter is going to get lost in the 2000 other letters we all get as we approach Medicare age.

But it's like when Abraham argued with God about saving Sodom and Gomorrah. Abraham asked God if He (or She) would save the cities if there were just 50 righteous people in them; God said "yes," He (or She) would save the cities for the sake of the 50. What about 40, Abraham dared to say? God replied, OK, even for 40. Abraham kept lowering the bar and in the end God said even if there were only 10 righteous people in Sodom and Gomorrah, He (or She) would save the other umpteen thousands of wicked inhabitants for the sake of the 10 (see Note). 

Shumer's law requiring that all of 100% us be sent a notice is not going to change the fact that 0.3% of us do dumb things. But what the hell (sorry, God).

NOTE: In the end, God decided there was only one righteous person in Sodom and Gomorrah. He (or She) gave that guy a heads up to leave and then wiped the places out.

Which Political Party Created the Medicare "Premium Support" Idea?

"Medicare costs are rising faster than projected revenues. Action to close the emerging deficit is inescapable. We propose converting Medicare from a “service reimbursement” system to a “premium support” system (underline added by blogger). These changes would resemble many that are now reshaping private employer-based insurance. Our reform would encompass not just the “public” Medicare program but also the “real” Medicare, which includes the supplemental plans to which most Medicare beneficiaries have access. Approved plans would have to offer stipulated services. We review numerous technical issues in moving to a new system that cannot be solved quickly and that preclude quick budget savings."

Which blood-sucking insurance companies wrote this article in the lefty Health Affairs magazine that began with the words in the paragraph directly above? Which hateful Republicans want to change "Medicare as we know it" to premium support?

These Democrats did, 20 years ago. Aaron was and is (in his dotage I assume) with the far left wing Brookings lobbying group. Reischauer was with Brookings then, later with the even further left Urban Institute and was most recently President Obama's Democratic-Party public representative to the Medicare Trustees. Both had previously been staffers to Kennedy and like Democratic Congresspeople.

Medicare Part C Spending Per Person Drops to 20th Century Levels

The original 1995 (proposal)-1997  (passage) intent was that public Part C Medicare health plan spending per person would be 5% less than spending on Medicare fee for service (FFS) beneficiaries. That's when Part C was supposed to be just HMOs and that was how HMOs worked in the real world, not controlled by dumb Congresspeople trying to buy votes. And that was the case for Part C of Medicare in its first few years up until around 2005. 

Source: June 2016 Medicare Trustees Report, Tables II.B.1 and IV.C.1 and equivalent tables in previous year reports

Now it's back to the future (see illustration). For the last few years -- since the passage of the Patient Protection and Affordable Care Act (PPACA) -- spending per public Part C Medicare beneficiary has dropped below 100% again, down to 96% in 2015.

In between, nutty Congresspeople added PPOs that brought the percentage up to about 100%, and added special deals for Democratic-leaning unions bringing it up to 103%, and added a crazy FFS plan that got paid like it was an HMO, bringing the difference up to 107% in 2007. All bad ideas. All the Congressional side deal except the PPO idea have been slowly ended (slowly, to be fair to the beneficiaries) or are on the way out and will be ended over the next few years. Now public Part C Medicare health plan program is working as originally intended by the Democrats who thought up the idea.

(Oh, in case you believed President Obama when he said Part C beneficiaries cost 15% more than FFS beneficiaries, he lied to you. In case you believed him when he said Part C was private, he lied to you. In case you believed him when he said Part C was a Republican idea, he lied to you. In case you believed him when he said his mother had been kicked off her health care insurance because she had cancer, he lied to you.)