Guest Column: Corporate ‘Medicare ADVANTAGE’ plans have limited coverage and a questionable future

By Dr. Jeffrey R. Cates

More than 10 million seniors have enrolled in a private corporate version of Medicare known as Medicare ADVANTAGE/Choice with the hope that such a plan would be cheaper and offer more options for seniors. Unfortunately, multiple problems have been reported with these corporate plans. Some of these have included fraudulent and/or unethical enrollments into Medicare ADVANTAGE plans, failure to disclose the limitations of the plans, and high costs to both the seniors and taxpayers.

Fraud and abuse—Many seniors have complained of high co-pays/deductibles and policy limitations. According to a Bloomberg news report, Medicare received 2,700 complaints about Medicare ADVANTAGE from beneficiaries over five months in 2007, many of them involving deceptive or abusive sales practices. The Times reported that an audit found that “tens of thousands of Medicare recipients have been victims of deceptive sales tactics and have had claims improperly denied by private insurers. The excessive restrictive control exerted by some of these private plans has been dubbed corporate communism.

Limited acceptance—Due to the administrative and financial challenges associated with non-contracted Medicare ADVANTAGE plans, about 35 percent of medical facilities will not accept Medicare ADVANTAGE plans; Mayo Clinic’s website notes that they do not agree to the restrictive terms and conditions associated with non-contracted Medicare ADVANTAGE plans and will not accept them. Seniors with Medicare ADVANTAGE cannot receive care from the many clinics that do not accept Medicare ADVANTAGE. Seniors with Medicare ADVANTAGE should contact their insurance plan to obtain a list of in-network providers that they can see or switch to original American Medicare.

Corporate welfare—While a few enrollees may get some trickle-down benefit from the excessive funding, Medicare ADVANTAGE plans are a huge tax burden to taxpayers. Medicare ADVANTAGE corporations collect 12 to 19 percent more money per patient than original government Medicare amounting to an extra $1,140 for each Medicare ADVANTAGE plan enrolled. This bill is paid for by the American taxpayer. According to a health economist at Boston University, each extra dollar given to these private corporations results in only 14 cents of medical services to our seniors with the remaining 86 cents wasted on these private insurance companies overhead and profit. Some have termed this “corporate welfare.” In comparison, the American government spends only 2-1/2 cents on overhead for managing the original American Medicare plan, leaving nearly 98 cents for medical services. Medicare ADVANTAGE insurers are getting unwarranted subsidies that pad their profits but don’t improve the care of seniors.

Dubious future—According to the chief actuary for the Medicare program, “the additional payments to Medicare ADVANTAGE plans, above and beyond the costs of traditional Medicare, is causing higher premiums for all beneficiaries and speeding the depletion of the Hospital Insurance Trust Fund for Medicare.” Because of all these shortcomings, the future of these Medicare ADVANTAGE plans is dubious. It is estimated that $150 billion in excessive overhead cost can be saved over a 10-year period by eliminating taxpayer gifts to these corporations. Without the extra 12 to 19 percent in federal funding, these corporate Medicare ADVANTAGE plans may cease to exist since they most likely cannot match original American Medicare’s low 2.5 percent overhead. Of course, the American taxpayer and seniors will win since $150 billion will be available for medical services rather than corporate overhead and profit.

What can you do? You can contact your state representatives and senators and request that they cut the excessive pork-barrel funding of these abusive and unnecessary corporate Medicare ADVANTAGE plans. If you care for parents or other seniors, you may wish to help them avoid being conned into signing up for Medicare ADVANTAGE programs without having first reviewed the details and implications. If you have a Medicare ADVANTAGE plan, you may wish to switch back to Original American Medicare; to do so, simply call 1-800-MEDICARE (1-800-633-4227) and request assistance.

Dr. Jeffrey R. Cates is a chiropractor and trained as an orthopedic specialist with a master’s degree in biomechanical trauma. His published works include several medical journal articles on quality assurance and standards of care in health care. Dr. Cates’ work is included in the searchable medical literature available at the National Library of Medicine and National Guideline Clearinghouse. He is also co-author of the low-back systematic review and lead author of the systematic review chapter on thoracic disorders of the profession’s best practice guideline text. He maintains a private practice of chiropractic orthopedics with his wife, Dr. Christina Jensen, in Oregon, Ill.

From the Jan. 12-18, 2011 issue

One thought on “Guest Column: Corporate ‘Medicare ADVANTAGE’ plans have limited coverage and a questionable future

  • Jan 17, 2011 at 11:30 am

    RE: Eric’s Bologna

    The gentle readers will have to choose whom to believe; a doctor with a master’s degree in healthcare administration & biomechanics, & board certification in insurance consulting, with no financial interest either way, – or – an insurance salesman who sells the very insurance policies that have proven so problematic. Indeed, doing your homework is good advices, BUT trusting a salesman is not the best idea. It is best to compare references with credible consumer advocate sources. Fortunately, the facts in the article are easy to confirm with credible outsides sources. Here is just one:

    California Health Advocates and the Medicare Rights Center notes that “Regulatory Oversight of Insurance Companies and Agents are Inadequate to Protect People with Medicare” It can be accessed at:

    They note that: “Arguably, agents may take more time marketing and explaining MA products that provide drug coverage and change the way consumers receive Medicare medical benefits. While agents (and plan sponsors) get paid more for MA enrollments, though, there are no corresponding safeguards to ensure that agents actually do engage in more in-depth “service” and “time” necessary to explain MA plans to prospective enrollees, or to confirm that such plans are in fact appropriate for a given individual, such as explaining that one will have to use the plan’s network of doctors.” …“HICAP counselors in California, New York and around the country have handled multiple complaints from consumers who were sold MA products thinking they were enrolling in either a Medigap plan or a standalone PDP offered by the same company. Enrollees switching from fee-for-service Medicare to managed care frequently must change providers and face different and sometimes greater cost-sharing structures often not adequately explained by an agent selling them one of these plans. Without safeguards in place to ensure that the difference in products is adequately explained to prospective enrollees, the linking of higher commissions to enrollments in MA products simply serves as a cover for allowing marketing agents to steer customers to products that generate higher-capitated payments for the company.”

    Indeed, SOME Medicare ADVANTAGE recipients will come out ahead financially IF they have limited Healthcare and Drug costs. Those that actually have larger expenses often find many hidden costs and uncovered services. Many seniors with Medicare ADVANTAGE seeking care at many high quality healthcare institutions, such as Mayo Clinic, will be turned away at the door.

    Additionally, Medicare ADVANTAGE plans suck an extra 12 to 19 percent in federal funding from the Medicare funds. The corporations get an extra $1,140 of our taxpayer money for each Medicare ADVANTAGE plan enrolled with only 14% ($160) making it to Seniors for healthcare services. That leaves $980 of our tax dollars for insurance corporate profit and overhead, … including salesman Eric’s commission

    Best regards,
    Dr. Cates

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