CONSUMER REPORTS: Rates Medicare HMO Plans
As Medicare beneficiaries become eligible this fall for a wide range of new health plan options, they "may soon have no choice but to join a private managed care plan," according to a survey published in next month's Consumer Reports. The magazine concludes that "[i]f supplemental policies become unaffordable, beneficiaries will have no choice but to turn to managed care, which limits their choice of doctors and hospitals, but generally offers at least as much coverage as the combination of Medicare" and a private supplemental policy commonly called Medigap (CongressDaily, 8/12). The Consumer Reports survey investigated more than 200 Medicare HMOs and 1,200 Medigap plans in 19 cities, finding "a market in turmoil." Medigap premiums are rising "beyond the reach of many beneficiaries" -- up 35% since 1994. Further, rates for Plan C, "the most popular of the 10 standardized Medicare-supplemental plans, are up 41% since 1994." The basic Plan A policy is up 44% while a more comprehensive version, Plan F, is up 23%. Consumer Reports partly attributes the increases to hospitals "shifting more procedures to outpatients settings" so they can increase their billings to insurers. Insurers then pass these costs directly on to policyholders.
A Good Deal?
The survey concluded that Medicare HMOs "are less expensive and offer more services for the money" than Medigap -- "if beneficiaries don't mind the restrictions placed on care." Also, the survey warns, seniors joining a Medicare HMO "should be prepared for change," because what "is a good deal today may be a poor one a few months from now. Benefits can and do disappear." For example, Medicare HMOs are beginning to cut back on prescription drug benefits, the survey finds (Lieberman, September 1998 issue). The author of the report, Trudy Lieberman, said, "At this moment, HMOs are a better value than Medicare supplement policies. The big question is how is that going to change in another year" (Bonfield, Cincinnati Enquirer, 8/13). The survey also found that as Medicare provides a growing number of new options, seniors will likely find it hard to "comparison shop for the best deal" and may be entering areas of "high financial risk." Further, health care experts say some of these "choices bode trouble for the future of the program" and could "represent the first steps in dismantling the system" (Consumer Reports, September 1998 issue). The Boston Globe reports that the survey compared plans on a "value index" that rates benefits and premiums, but not quality of care. But Lieberman said the magazine will publish a separate study on quality in October.
In Boston, Consumer Reports rated 16 HMOs and one Medigap plan, finding Harvard Pilgrim Health Care and Blue Cross and Blue Shield "among the best buys." "Among HMOs that do not offer prescription drug benefits, Harvard's First Seniority ranked at the top, closely followed by HealthSource of New Hampshire and Blue Cross' BlueCare 65 plan," the Globe reports (Pham, 8/13).
After rating eight Medicare HMOs and 18 Medigap plans in Cincinnati, the magazine found ChoiceCare's Medicare HMO to be the "best value." The worst was Pioneer Life Insurance's Type I supplemental plan. While private Medigap plans, say from Medical Mutual of Ohio or United HelathCare, could run a senior anywhere from $737 to $2,029 a year, six of the Medicare HMOs in the Cincinnati area charged no annual premium. And these HMOs offered drug, dental and vision benefits "at least as good" as these private plans, the Cincinnati Enquirer reports. But while these HMOs might be a good deal compared to local private plans, "they aren't as good as the Medicare HMOs offered in Miami, Los Angeles, Denver and Phoenix." The Enquirer reports that this is because federal reimbursements for Cincinnati-area HMOs are much lower than other areas of the country (8/13). Click here to view a chart comparing Cincinnati's Medicare options.
"In Detroit, most of the drug benefits are not very good," Lieberman said. The Detroit News reports that of the six Medicare HMOs studied in the Detroit area, one did not pay for any prescriptions at all, and the other five had "poor" drug benefits (ElBoghdady, 8/13).
In Manchester, NH, the survey found that Medicare HMOs "provide better than average value with their basic plans." However, the Manchester Union Leader reports "none of the basic Medicare HMO plans serving Manchester residents -- even Harvard Community Health Plan with a $504 annual premium -- offers prescription drug benefits" (Vincent, 8/13).
Rocky Mountain State
In Denver, Consumer Reports found that the nine Medicare HMOs "offer good value for the money their subscribers pay, while Medicare supplemental and prescription-drug plans give less value." The Denver Post reports that only one Denver-area HMO -- Kaiser Foundation -- received an "excellent" rating for the prescription drug coverage in its "plus" plan, which seniors can buy for $468 a year (Raabe, 8/13).
And in the Twin Cities of Minnesota, Medicare HMO enrollees "don't get as much value for their premium dollar," according to the survey. The Minneapolis Star Tribune reports that HMOs in the Twin Cities area -- such as HealthPartners, Medica and Blue Cross and Blue Shield of Minnesota -- get about $300 less per month per patient from the federal government than HMOs in New York. The Star Tribune reports that the "disparity, which also affects rural counties across the country, has been a sore point among Minnesota physicians, health care officials and consumers for years." George Halvorson, CEO of HealthPartners, said, "The Medicare reimbursement formula is a highly artificial formula. It favors states that have political clout" (Howatt, 8/13).
Good, Bad And Ugly
The survey concludes that Medigap policies are "the best choice for those who put a high value on choosing any doctor or hospital they want, and who can afford the premiums." But HMOs "are good for people who need prescription-drug coverage or who can't afford the premiums for a Medicare supplement." Among the future choices Medicare will offer, the survey offers these recommendations:
- Provider-sponsored organizations: Good for seniors who want low premiums, low out-of-pocket expenses and greater choice in choosing a doctor in the network.
- Private fee-for-service plans: Good for "only the wealthy who can pay high out-of-pocket costs."
- Private contracting with physicians: Same as above -- only the wealthy need inquire.
- Medical savings accounts: "Not recommended" because the accounts are "a $6,000 gamble against an insurance company that you will stay healthy" (Consumer Reports, September 1998).
The magazine plans to post the survey findings on its website -- www.ConsumerReports.org. As of this morning, however, the results had not been posted. This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.