I recently posted about what is called the “Medicare Advantage Trap,” which can make it economically impossible as a practical matter to switch from a Medicare Advantage (MA) plan to Traditional Medicare (TM), even though there is an open enrollment period each year in which eligible beneficiaries are supposed to be able to make such changes freely. If ever there was a reason to be careful about committing to MA plans, that is an excellent one. A recent survey of both MA and TM users has uncovered some other issues that should also be considered.
The survey was conducted in late 2023 and early 2024. It surveyed participants in a number of different MA plans and participants in TM about their experiences and their satisfaction. The levels of satisfaction with their health care were identical. This was surprising given that one of the reasons so many people sign up for MA plans is the belief that they will be happier there, at least in part because of the extra benefits they can receive.
If the two Medicare alternatives produce equal levels of satisfaction, it is hard to justify the extra expense associated with MA plans. Medicare pays the companies that run MA plans almost $2,000 over and above what it costs TM to provide health care for its beneficiaries. The total cost to the U.S. Treasury is $88 Billion each year. That is a ton of money that is almost wasted, if it does not provide better care for the participants.
One significant difference between MA plans and TM is that 22% of the MA participants reported that their care was delayed due to a requirement for prior approval. There is almost no requirement for prior approval in TM. On the other hand, prior approval is one of the major ways that the companies that run MA plans keep their costs down. In some cases at least, delayed treatment comes too late for the patient.
Another surprising finding was how few of the extra benefits offered by MA plans were actually used by the participants. 31% of the MA participants reported that they had not used any of their benefits in the preceding 12 months. 58% had not used any dental benefits, 59% had not used any vision benefits, and 93% had not used hearing benefits. The reason most commonly offered by the MA participants for not using their benefits was that they did not need them. That was the response of 63% of those surveyed. However, 24% responded that they didn’t use their benefits because they did not know what benefits were available to them. About 9% reported they did not use their benefits because they were too expensive.
One possible reason for the low usage rate of the benefits by MA participants is that they are at this point still relatively young and relatively healthy. As they age and become sicker, they will need more of the benefits being offered. Increased usage will also likely increase the number of MA participants who experience delays in treatment due to prior approval requirements. This may also increase the percentage of MA participants who are not satisfied with their care and who might consider switching over to TM.
As I have written before, a Medicare Advantage plan may be the best choice for you. You need to give careful consideration to your needs and what the MA plan offers and what trade offs you will have to make in order to get the extra benefits being offered by the MA plan. In thinking about your needs, consider not just your current needs, but what your needs might be in the future as you age and become less healthy, as you surely will. As you become less well, that is when the Medicare Advantage trap springs. Although you can switch to TM during the open enrollment period, you may find that you are too sick to get the Medicare supplemental coverage that covers most of what TM does not. Without that supplemental coverage, it may not be financially possible for you to transfer and you may be stuck.
Good luck, Seniors.
