Jesse Kelly: Misinformed on Medicare Advantage

“Giffords cut $500 billion from Medicare and Giffords eliminated Medicare Advantage, and now she is lying about…..” This quote from Jesse Kelly appeared in today’s Arizona Daily Star and I felt compelled to correct the Republican candidate for Congress.

Where did Jesse Kelly hear that Medicare Advantage is being eliminated? It is not. In fact, Medicare Advantage is expanding throughout Arizona and  a new plan is coming to the Tucson market for 2011.  The CEOs of UnitedHealth Group, Humana, and Wellpoint have all told stock analysts that they are staying in the Medicare Advantage business because it is growing and lucrative.

I was just reading a report from CMS (Centers for Medicare and Medicaid) concerning  payments to Medicare Advantage plans, and I was surprised to learn that new plans are being encouraged and will receive bonus payments.  The payment scheme for Advantage plans is changing  and bonus payments will be important for new and old plans, with additional money going to Advantage plans that are deemed to deliver the best service to their members.

Jessey Kelly is correct that the Affordable Care Act includes many measures that are expected to save $500 billion in Medicare spending over the next ten years, and a big chunk of those savings will come from reduced payments to Medicare Advantage plans.  Since 2006, when Republicans in Congress changed the payment scheme for Advantage plans, Medicare has been paying 14% more for people enrolled in Medicare Advantage than for those who stay with “Original Medicare”. This has meant big profits for insurance companies at the expense of the 75% of seniors who do not participate in Medicare Advantage.

The original idea for private Medicare plans was that insurance companies would be paid 95% of what Medicare spent on average for a Medicare beneficiary. Medicare would save money by paying a flat fee for each beneficiary enrolled in a private plan. Insurance companies, through managed care, would deliver Medicare benefits in a different and more economical way than “Original Medicare”.  That worked for a while until insurance companies got greedy. Then they hit the jackpot in 2003 when Congress created the Medicare Part D drug plan.  Starting in 2006, everyone on Medicare was told to sign up for Part D, which is a big help to seniors but added billions of dollars to Medicare spending.  At the same time, the Medicare Advantage payment scheme was changed. So instead of a 5% savings for Medicare, the private plans were costing 14% more for each person enrolled in an Advantage plan than for those not in these plans.

Did I mention that in 2006, seniors were told to enroll in Part D? While insurance agents were selling Part D for a $15 – $25 monthly premium, they had the opportunity to tell clients how they could get Part D for free by enrolling in a Medicare Advantage plan.  As you can imagine, enrollment in Medicare Advantage plans skyrocketed.  In 2010, 25% of Medicare beneficiaries are enrolled in Medicare Advantage plans.  $800 per enrollee per month x 11 million enrollees =……billions of dollars in revenue for insurance companies.  If their profit margin is just 5%, that’s hundreds of millions of dollars.

The billion dollar business of Medicare Advantage is too lucrative to go away.  Insurance companies will find a way to stay in the business and make a profit.  Some seniors may have to change to another Advantage plan.  But seniors will still have choices when it comes to their Medicare coverage.

Jesse Kelly needs to study up on Medicare Advantage if he’s going to talk about it. I hope this information will help to enlighten him.

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16 Responses to "Jesse Kelly: Misinformed on Medicare Advantage"

  1. cochisecitizen says:

    Jesse Kelly needs to study up on Medicare Advantage if he’s going to talk about it. I hope this information will help to enlighten him.
     
    – Nice gesture, but I doubt it will help as he seems hopelessly in over his head. You make an excellent point with the insurance companies getting greedy with Medicare insurance. A couple of years ago I had a friend visit from Hawaii. He got very ill within a few days and I took him to Northern Cochise Hospital in Willcox. They diagnosed him as having a severe respiratory infection and quickly transferred him to UMC. He was on a respirator for 2 weeks and nearly died, but thanks to our excellent medicare care in Arizona, he fully recovered and returned to Hawaii. As I gave my name & contact info when he was admitted, a month or so later I started getting calls for him from bill collectors. It turns out he had signed over his Medicare coverage to Kaiser Health Care plan in Hawaii, and Kaiser was refusing to pay anyone. Assuming it was a simple mistake I went to the trouble of calling Kaiser. The service rep told me they weren’t obligated to provide coverage because their TOS clearly state that when a member is out of their coverage area, the member has to call first and obtain approval for any medical care. I told her that he was unconscious and on a respirator and how could they possibly expect him to call? She had the gall to tell me that didn’t matter, he didn’t call first for approval, so none of his treatment was covered.
    I don’t now how it ended up for him, but I do know hen I reach Medicare age I’m not signing ANY coverage over to any insurance company.

  2. Mark says:

    NO worries, he will not get the votes to win.  This guy being pushed by the Tea Party, as many are in other states, have no political knowledge.  We cannot vote for far right candidates that have no historial knowledge and even current knowledge about this country.  

  3. tiponeill says:

    Kelly isn’t “informed” on anything – he just repeats tea party talking points. He is one of the know nothing results of the tea party revolt in the Repub primaries, and his appeal is only to them.

  4. medicareblogger says:

    Wow, that’s a frightening story.  Kaiser generally gets high marks for how they treat their members.  I hope your friend was able to get the billing situation corrected.  Medicare Advantage plans are required to cover their members who need emergency care when they are out-of-network.
     
    When people run into problems with their Medicare Advantage plan in Tucson (or Sierra Vista) and they think they need help fighting the insurance company, I have told them to call Gabrielle Giffords’ office for help.  She has a staff person in her office who knows Medicare and Medicare Advantage inside-out.  I have heard good things about seniors getting help through Congresswoman Giffords’ office.  Advantage plans have an appeals process, but sometimes it’s a good idea to ask for help from the local Congressional office.

  5. JW says:

    I am going to be SO Happy when Kelly defeats Giffords so you Liberals will have to eat your words.  Giffords has spent AZ taxpayers into a historical hole of debt with no plan to get us out of debt.  Keep bashing…You Tools…Your candidate has NO clue how to run so much as a cool aid stand, she ran El Campo Tire in the Ground before she decided to help Pelosi run our dollar in the ground with all their crazy spending.  Nov 2, she is FIRED!  Watch and see… The only chance she has to defeat Kelly is to use all the money the UNIONS STOLE from tax payers to run all her misleading TV ads.  It’s not over until it’s over.  46-46 is hardly a run away…Nuff Said

  6. medicareblogger says:

    Hopefully you have a Part D plan so you can take a drug that will lower your blood pressure. Why are you sooo angry?  And why does Jesse Kelly want to get rid of Social Security?
     
    By the way, it was GW and Republicans who took a surplus and turned it into a trillion dollar deficit by cutting taxes while starting two wars and expanding the federal government.  If Americans wanted our troops defending us by fighting around the world and we wanted more security at home, we should have paid for it.  Why is it okay to run up huge deficits for war but not for health care and unemployment checks?

  7. NidanGoju says:

    What is not mentioned in the article is that Medicare Advantage plans offer extra services- including vision and dental benefits- that traditional Medicare does not.  And, as Douglas Elmendorf, director of the CBO, stated in his testimony to congress, seniors would lose benefits as a result of the decreased funding form Medicare to the insurance providers.
    As these plans offer fewer services enrollees will revert back to the government-run program and the Advantage plans will naturally disappear as they are today.  Will insurers continue to offer so-called Advantage plans, most likely.  Will they look any different than fee-for-service Medicare, likely no since the extra benefits will be gone, in which case the “Advantage” plans have technically been eliminated. 
    Maybe the author should study up on Medicare Advantage plans before they write about them.

  8. medicareblogger says:

    Medicare Advantage plans in Tucson do not have much in the way of additional “advantages” beyond what Medicare offers.  The main benefit of Medicare Advantage is not having to pay the monthly premium for a Medicare Supplement and a Part D plan.
     
    One or two Medicare Advantage plans in Pima County offer minimal dental benefits (cleaning and exams) but most do not. Most (but not all) plans offer free gym memberships.  This benefit costs the plans about $5 per enrollee/month out of the $800 (approx.) payment they receive from Medicare.  This is because most enrollees don’t use the gym benefit.

    45% of Medicare beneficiaries in Pima County are enrolled in Medicare Advantage plans. People with money might go back to Medicare and get a supplement, but seniors on limited incomes will not have this option and they will stay with Medicare Advantage.
     
    I will be studying every Advantage plan in Pima County over the next few weeks as part of training required by the plans.  If you studied the plans in detail you would know what “advantages” are available as part of Medicare Advantage.  It seems like you have studied Medicare Advantage at the macro level, while I deal with Medicare Advantage at the micro level.   I also scored 100% on the AHIP  test- so there!
     

  9. NidanGoju says:

    Congratulations on your perfect score on the AHIP. 
    You are correct in assuming the seniors that are financially able will more than likely go the Medicare/Supplement route.  The question then becomes what will those remaining seniors do when they lose benefits, even limited additional benefits as you state, or see an increase in cost to retain the benefits or cover Part D.  It only makes sense that most will also convert to the Medicare route.
    Regardless, this does not pose a very rosey future for the viability of Advantage plans.
    p.s. and yes, I am looking at this on the macro level as will the vast majority of the Insurers. 

  10. cochisecitizen says:

    And the only chance Kelly has to defeat Giffords is if the Koch billionaire brothers pour millions for his TV ads whining about how the government is spending our money on things we don’t want and don’t need – while his daddy’s construction company runs around latching on to every government funded project they can get their hands on. Because the Republican Congressional Campaign has yet to drop a dime on the race, as they know he’s hopelessly far too conservative for the district.

  11. tiponeill says:

    Regardless, this does not pose a very rosey future for the viability of Advantage plans.
    p.s. and yes, I am looking at this on the macro level as will the vast majority of the Insurers.

    Why should the taxpayers WANT to assure a rosy future for the insurance companies ?
    I don’t – I’m tired of them milking our medical care system dry. It would have been far better to have a single payer system and we will never get control of escalating costs as long as we are more concerned with assuring that insurance companies have a rosy future than with healthcare.

  12. medicareblogger says:

    Read my lips:  Medicare Advantage will continue in Tucson. With millions of baby-boomers turning 65, insurance companies like Humana and United will stayin the Medicare market because it is growing and lucrative.
    Insurance companies have plenty of fat they can cut. The extra benefits are not as important as co-pays for doctor visits.  If co-pays in Advantage plans go up too high, seniors will drop out. I think they’re at their limit now.  Caps on patient out-of-pocket expenses and an 85% medical loss ratio will keep the plans in line.  These changes are part of the Affordable Care Act.
     
    Medicare Advantage plans (in various forms) have been in Tucson for many years and will continue. Smaller plans might drop out, but the big plans will be able to stick around.

  13. Jim+ says:

    Would you post a link for  the article from the Arizona Daily Star?

  14. cochisecitizen says:

    Here you go: link

  15. medicareblogger says:

    The short piece was in the Sept 10 edition under “Political Briefs”.  Here is the link to it:
    http://azstarnet.com/news/local/govt-and-politics/elections/article_dffc4461-c71a-5749-aaf4-f9cd1c526f1d.html

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