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Obama takes on Advantage plans, popular in FL

By Carol Gentry
1/13/2009 © Florida Health News

More than 855,000 Medicare patients in Florida will see their health coverage change if President-elect Barack Obama follows through on a statement he made Sunday. 

Obama told a TV interviewer that he wants to eliminate Medicare Advantage, a federal program that pays private managed-care companies to cover all the medical expenses for beneficiaries who enroll, because it costs more than traditional Medicare without making people healthier, he said. He would use the savings to expand coverage to the uninsured. Florida has between 3.6 million and 4 million uninsured, depending on who's counting.

He may have meant eliminating excess payments in Medicare Advantage, which is what he promised during the campaign. Either way, some predict he'll have a political fight on his hands, especially in Florida.

Medicare Advantage companies receive an average of 14 percent more than the taxpayers spend on beneficiaries under traditional Medicare, according to studies by the Congressional Budget Office, the Medicare Payment Advisory Commission and others. Some of that goes to profits while some goes to extra benefits for the members. Companies take the risk for high-cost enrollees but get to keep the money they don’t spend. 

The monthly premium that Medicare Advantage companies receive in Florida is much higher than in most states -- an average of more than $1,000 a month per person this year, according to State Health Facts, a Web site published by the Kaiser Family Foundation. 

“We are spending a lot of money subsidizing the insurance companies around something called Medicare Advantage, a program that gives them subsidies to accept Medicare recipients, but doesn’t necessarily make people on Medicare healthier," Obama said Sunday on ABC This Week. “And if we eliminate that and other programs, we can potentially save $200 billion out of the health care system that we’re currently spending, and take that money and use it in ways that are actually going to make people healthier and improve quality.”

But the industry predicts a backlash in Florida, where 26 percent of beneficiaries are enrolled in Medicare Advantage plans, most of which offer perks that traditional Medicare doesn’t cover in addition to doctors’ visits and prescription drugs. By giving up a bit of freedom – agreeing to stick with the doctors in a plan’s network -- members often get free eyeglasses, dental coverage and gym memberships.

“Most peo don’t have the ‘doughnut holes’ in the Advantage plans that they have in (prescription drug plans),” said James Bracher, executive vice president of the Florida Association of Health Plans. “It’s clear that a large number of people like those kinds of plans. To get rid of them would be a mistake.”
And it could be political poison, agents say. Medicare beneficiaries tend to be vocal when any benefits are threatened, history has shown, while the numerous uninsured in Florida who stand to benefit from Obama's plans to use savings for expanded coverage tend to be silent and unorganized. 
“The outcry would be unbelievable if they were to take away Medicare Advantage,” predicts broker/agent Ron Johnson of Clearwater. He predicted that Obama will just cut the payments. 
There would seem to be excess flab to cut, since in many parts of Florida, beneficiaries can make money by enrolling in Medicare Advantage plans. That’s because the plans don’t need all the money they’re getting from the government, so some offer to forego part or all of the patient’s contribution to the Part B premium, which now runs $96.
That means an Advantage plan member's Social Security check may be considerably higher than that of a neighbor who is not enrolled in a cash-back plan. A few plans offer the entire Part B refund, but most keep part of it. Johnson said the company he represents, Coventry, offers a rebate of $77 a month in Florida.

Such plans are most popular with healthy beneficiaries who don’t have a lot of worries about co-payments for hospitals, drugs and tests, he said. Those who use Veterans Administration clinics and hospitals have the best deal, since they can get the cash back without worrying about the co-payments.

“For veterans it’s a slam-dunk,” he said. “A lot of people can’t even believe it.” 

-- Contact: 727-410-3266 or e-mail  Carol Gentry.