How exactly does Medicare handle high medical costs?

[aja8888]

Nice write up, SteveL. I don't recall having to show proof of prior continuing medical insurance when I signed on to Medicare, though.

All in all, Medicare has proven to be a great deal for us older folks as compared to the new ACA insurance costs across the board. While I have been fortunate only having a hip replacement since I signed on, DW has had several fairly lengthy hospital stays from problems related to COPD and she is on several costly meds. Most of this has been totally covered (Plan F also) although she hit the doughnut hole a few years in a row.

[Live And Learn]

Quote:

Originally Posted by REWahoo Not so. If you choose a Medicare supplement plan (any letter of the available alphabet) when you initially go on Medicare, there are no prequalification requirements. What I recall being posted was if you chose a Medicare Advantage plan rather than a supplement, then subsequently wanted to switch to a supplement, you had to qualify.

Yep - that's what I understood. My question was really around pre-existing conditions. If disallowing pre-existing conditions is now illegal for ACA plans, why is it still ok for Medicare Supplement plan ?

[MichaelB]

Quote:

Originally Posted by Live And Learn Yep - that's what I understood. My question was really around pre-existing conditions. If disallowing pre-existing conditions is now illegal for ACA plans, why is it still ok for Medicare Supplement plan ?

Insurance always has a need to deter people from gaming the system. If people opt for the minimum coverage, and then increase it when they get sick, insurance doesn't work as well. What Medicare does is ask you to choose your level of supplemental coverage when you first sign up. You are guaranteed access to the policy level you choose. After that point you can increase coverage only if the insurer accepts, and you can decrease coverage as you wish, both during open enrollment periods.

[meierlde]

Another little fact about Medicare, it acutally starts the first day of the month you turn 65, and if you are born on the first it starts the month before. (To make the paperwork simpler).

[haha]

Quote:

Originally Posted by REWahoo There are a number of variables. Depends on your income, the drugs you take, and, in the case of a Medicare supplement policy, your age. For someone age 65, the total monthly cost of basic medicare, a comprehensive drug policy (Part D) and a Plan F supplement might be $300. For someone age 80, that same coverage might be $500 or higher.

This also is state specific. My brother who lives in TX has a policy similar to yours. In WA, as well as some other states, the premium does not vary with age. It does vary with statewide underwriting experience. A few years ago the companies got cute and figured out how to wall off some older policy holders into a run-off group, which put them at a significant disadvantage. A change in state law put that to rest, and my premium immediately dropped by $75-$80/mo. WE have tended to have very consumer responsive insurance commissioners, Mike Kreidler currently.

Ha

[FIRE'd@51]

Quote:

Originally Posted by MichaelB Insurance always has a need to deter people from gaming the system. If people opt for the minimum coverage, and then increase it when they get sick, insurance doesn't work as well. What Medicare does is ask you to choose your level of supplemental coverage when you first sign up. You are guaranteed access to the policy level you choose. After that point you can increase coverage only if the insurer accepts, and you can decrease coverage as you wish, both during open enrollment periods.

Herein lies a significant problem in the design of the ACA. As I understand it, during the yearly open enrollment, someone with a bronze policy can upgrade to silver, gold, or platinum if one's health deteriorates. Even worse, someone who didn't even buy a policy this year and elects to pay the fine, can purchase a policy next year if he/she develops a chronic condition which is expensive to treat.

[aja8888]

Quote:

Originally Posted by FIRE'd@51 Herein lies a significant problem in the design of the ACA. As I understand it, during the yearly open enrollment, someone with a bronze policy can upgrade to silver, gold, or platinum if one's health deteriorates. Even worse, someone who didn't even buy a policy this year and elects to pay the fine, can purchase a policy next year if he/she develops a chronic condition which is expensive to treat.

I don't see this as a problem but a benefit. You end up paying for the added coverage, don't you?

[M Paquette]

Quote:

Originally Posted by FIRE'd@51 Herein lies a significant problem in the design of the ACA. As I understand it, during the yearly open enrollment, someone with a bronze policy can upgrade to silver, gold, or platinum if one's health deteriorates. Even worse, someone who didn't even buy a policy this year and elects to pay the fine, can purchase a policy next year if he/she develops a chronic condition which is expensive to treat.

If you look at the pricing, the rise in monthly payment costs to the end user will roughly equal the reduction in deductible/max out-of-pocket costs from the higher grade plan. Persons doing this will effectively be paying the pro-rated difference in deductible over the course of the year.

Actuaries tend to be pretty thorough at this sort of thing...

[audreyh1]

Quote:

Originally Posted by M Paquette If you look at the pricing, the rise in monthly payment costs to the end user will roughly equal the reduction in deductible/max out-of-pocket costs from the higher grade plan. Persons doing this will effectively be paying the pro-rated difference in deductible over the course of the year. Actuaries tend to be pretty thorough at this sort of thing...

That's right. People buying individual policies don't usually "save" very much at all switching to the more comprehensive policy. Now if the employer is paying the higher premiums - than the more comprehensive policy is much preferred.

Point is apt, though, for someone refusing to pay for the insurance until they develop an expensive condition. This is where having adequate fines is important.

[haha]

Quote:

Originally Posted by audreyh1 Point is apt, though, for someone refusing to pay for the insurance until they develop an expensive condition. This is where having adequate fines is important.

+1 These policies are priced actuarially, not as a way to prepay for high expenses that you know you will very likely incur. This has to be prevented or the scheme will collapse.

Ha

[aja8888]

Quote:

Originally Posted by FIRE'd@51 ......... someone who didn't even buy a policy this year and elects to pay the fine, can purchase a policy next year if he/she develops a chronic condition which is expensive to treat.

Isn't this what was going on in Mass. under "Romneycare"? If so, how was that resolved so that the ACA would not see any or little of this? Is it the annual fines that are supposed to deter this?

In any event, not buying under the ACA can be resolved by just visiting the ER. Heck, ER's are so crowded here, there are several hour waits, even if you have real insurance.

FWIW, and I have no personal skin in the game (but DD does). Over the holidays I asked about 20 people I know, and also asked their adult children when I saw them, how they are fairing with the ACA. Here are some startling answers:

1. College student -19 years old (my step-granddaughter). - no insurance and parents never mentioned the ACA (very disheartening to us).
2. Work associate (very educated, MBA, etc) - his adult son never applied and has no insurance. I asked what is he going to do...answer was "I need to get him (son) looking into this".
3. Parents of step-granddaughter - One is self employed, both have no insurance (sad). Both age 40+, educated, etc. Actually did not know what the ACA was..that was surprising.
4. Close friend (divorced) with two adult daughters - one got insurance under the ACA. Other tried but got frustrated and gave up. His ex has no policy and is on Medicaid.
5. Balance of other folks were employed with policies from employer or on Medicare.

I did not run into anyone who is in the forgotten group here - too low an income for ACA coverage and no Medicaid eligibility due to no Medicaid expansion here in TX. Those folks are ER bound I guess.

[FIRE'd@51]

Quote:

Originally Posted by audreyh1 That's right. People buying individual policies don't usually "save" very much at all switching to the more comprehensive policy. Now if the employer is paying the higher premiums - than the more comprehensive policy is much preferred.

What about those getting a subsidy? Isn't that similar to the employer paying part of the premium?

[FIRE'd@51]

Quote:

Originally Posted by aja8888 Isn't this what was going on in Mass. under "Romneycare"? If so, how was that resolved so that the ACA would not see any or little of this? Is it the annual fines that are supposed to deter this?

I believe this was a problem in the beginning. People were paying the fine and then signing up when they needed a procedure and then dropping the insurance (stop paying the premium) after treatment. I think it was solved by raising the fines and maybe by instituting waiting periods. Perhaps someone from Massachusetts will chime in with a more detailed answer.

Never underestimate the ability of people to game the system. Heck, the multi-millionaires on this forum have figured out how to manage their income so as to qualify for the biggest possible subsidy. Wait til the press starts aggressively covering this.

[audreyh1]

Quote:

Originally Posted by FIRE'd@51 What about those getting a subsidy? Isn't that similar to the employer paying part of the premium?

No - because the same $ subsidy applies across all plans. You don't get a higher subsidy if you choose a more expensive plan.

Now on cost-sharing - there your only option is a Silver plan AFAIK. So you don't get to choose a more expensive plan either.

[FIRE'd@51]

Quote:

Originally Posted by audreyh1 No - because the same $ subsidy applies across all plans. You don't get a higher subsidy if you choose a more expensive plan. Now on cost-sharing - there your only option is a Silver plan AFAIK. So you don't get to choose a more expensive plan either.

So one could go from a Bronze plan to a Silver plan if they developed a chronic condition.

[audreyh1]

Quote:

Originally Posted by FIRE'd@51 So one could go from a Bronze plan to a Silver plan if they developed a chronic condition.

Yeah, but it might not save you any money.

[FIRE'd@51]

Quote:

Originally Posted by M Paquette If you look at the pricing, the rise in monthly payment costs to the end user will roughly equal the reduction in deductible/max out-of-pocket costs from the higher grade plan. Persons doing this will effectively be paying the pro-rated difference in deductible over the course of the year. Actuaries tend to be pretty thorough at this sort of thing...

If this is the case, no one should sign up for anything but a Bronze plan, regardless of their health. In fact, why bother to offer Silver, Gold, and Platinum plans? It will be interesting to see the breakdown of the enrollees in the different metals.

[audreyh1]

Quote:

Originally Posted by FIRE'd@51 If this is the case, no one should sign up for anything but a Bronze plan, regardless of their health. In fact, why bother to offer Silver, Gold, and Platinum plans? It will be interesting to see the breakdown of the enrollees in the different metals.

That's the conclusion I came to based on my analysis - but that was for my state where 20% coinsurance seems to be the max and max OOP was very close for most plans.

Some folks might be attracted by lower deductibles and copays in the higher priced plans, but then comparing the premiums should give them pause. However, I did notice some folks rejecting a bronze plan out of hand because of the higher deductible and the information that it was designed to "only" cover 60% of costs. But if you crunched the total cost numbers there didn't seem to be that much difference between the plans in the worst case scenarios.

Cost-sharing benefits would push some of the subsidized folks toward a silver plan.

[audreyh1]

Quote:

Originally Posted by audreyh1 No - because the same $ subsidy applies across all plans. You don't get a higher subsidy if you choose a more expensive plan. Now on cost-sharing - there your only option is a Silver plan AFAIK. So you don't get to choose a more expensive plan either.

BTW my earlier comment was if the employer were paying the premium, not part of the premium.

If the employer only pays part of the premium then the employee suddenly becomes much more cost conscious about the policy unless the more expensive plans are more heavily subsidized.

[MichaelB]

Quote:

Originally Posted by FIRE'd@51 If this is the case, no one should sign up for anything but a Bronze plan, regardless of their health. In fact, why bother to offer Silver, Gold, and Platinum plans? It will be interesting to see the breakdown of the enrollees in the different metals.

For an individual making after tax purchase this makes sense. If an employer is paying the policy, even self employed, it makes sense to purchase as much coverage as possible because it is fully deductible. The different levels of coverage would reflect varying $ of benefit the employer is paying.