When open enrollment for Medicare plans began, I decided to look for alternatives to standard Medicare. But before we talk about that, let’s take a look at health insurance in general.
The idea is that you are betting your money against your health. You pay monthly premiums to receive health care. If you are in good health, the insurance will keep more than you paid in. If you are in poor health, you get back more than you paid in.
So when you’re angry with your health insurance company (and who isn’t), the way to get revenge is to get really sick or have a bad accident. And that’s where the incentives get weird.
A private insurance company has incentives to charge you the highest rate the market can afford and give you the least healthcare they can get away with. Medicare, on the other hand, seems to want to pay for your health. The government will try to prevent fraud, but they don’t have to make a profit. The worst thing about private insurance is that they want to network you and your doctor. I can’t tell you how relieved I was to get out of net hell and onto Medicare. I’m not sure why insurance companies like networks, but it feels like a shakedown. This scam is not for your benefit and probably not for the benefit of your doctor either. The only reason to put up with it is – well, because you have to. However, if you’re having a poor health year with big expenses, consider alternatives. Let’s imagine two people in this situation.
Molly has a steady income. She tries to budget and doesn’t want any medical surprises. She wants to fit enough health insurance into her budget so that she has little or no co-payments. This is Medicare Supplement (or Medigap). She pays extra for a private policy that covers all or most of what Medicare doesn’t cover. There are no networks.
Bart is a businessman. He is used to uncertainty and risk. If necessary, he can afford additional payments. He wants as few bonuses and co-payments as possible for a “normal” year and a certain level of protection against catastrophes. That’s Medicare Advantage. He chooses a private company that uses his Medicare premium for coverage. The idea is that maybe a private company can offer more complete insurance than the government. But that company will have a network, and the cost of maintaining it outside of that network will be higher.
Let’s realize that the situation is a lot more complicated than I’m describing and there are good and bad companies and policies and that, well, things are happening. But a reasonable generalization is that Molly pays more in a year of good health, but Bart pays more in a year of poor health.
Bart will also have to deal with networking – which can pose problems in a rural area where providers are split between networks. For this reason, some local insurance brokers (did I forget to mention brokers?) refer to Medicare Advantage as Medicare Disadvantage.
But what if we had Medicare that pays for everything, with no networks? That’s what the New Mexico Health Security Act promises (see nmhealthsecurity.org). This proposal has been debated for many years and is now being drafted by a government agency.
In theory, it would be a big improvement for New Mexicans. It’s hard to imagine anyone liking the current system, but apparently some lawmakers are more concerned about potential future dysfunctions than specific current dysfunctions. Someday I will write about it.
Meanwhile, the enrollment deadline for Medicare alternative plans ended last week. I’ve done my research. I made my choice. Tune in this time next year to hear how it went.