BY TIM BONFIELD
The Cincinnati Enquirer
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COMPARING OPTIONS
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A comparison of Cincinnati Medicare HMOs to Medicare-supplement plans C and I |
Every Medicare HMO plan sold in Greater Cincinnati offers a better deal than any traditional Medicare supplemental plan, Consumer Reports magazine says, even though the prescription-drug benefits range from fair to poor.
But buyer beware: The sweet deals may not last long. Some Medicare HMOs already have begun cutting back on the benefits that have made HMOs so attractive to seniors. And some have begun dropping seniors themselves.
With seniors facing more complicated choices than ever about how to arrange their health coverage, Consumer Reports has taken the first comprehensive, consumer-focused look at Medicare options. The September issue hits newsstands Aug. 25, but will be available online Friday.
The magazine compared more than 200 Medicare HMOs and 1,200 Medicare-supplemental plans in 19 cities, including Cincinnati. Overall, the report found that the average premium for Medicare-supplemental plans has climbed 35 percent since 1994. Even worse, Med-sup plans can vary widely in price even though they offer exactly the same benefits. That means for most seniors -- especially those living on fixed incomes -- Medicare HMOs appear to be the way to go.
"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," said Trudy Lieberman, health policy editor at Consumer Reports.
Medicare was created in 1965 as a federal health plan for the elderly and disabled. The $208 billion program covers about 39 million people. For the past several years, rising costs have prompted debate in Congress about how to reform the system.
Medicare Part A covers inpatient hospital care and some skilled nursing care. Part B covers doctor bills, outpatient care, and some medical equipment and therapy services. To pay for the many deductibles, co-payments and various uncovered services, millions of Americans buy Medicare-supplement plans, which have sold in 10 standardized benefit packages (A through J) since the early 1990s.
In Cincinnati, the magazine rated eight Medicare HMOs and 18 Med-sup plans. The best value was ChoiceCare's Medicare HMO. The worst deal was a supplemental plan (Type I) sold by Pioneer Life Insurance.
While Medicare HMO enrollment has been growing fast in recent years, far more Tristate seniors still buy Med-sup plans. The magazine's data on Med-sup plans show that it pays to shop around.
Prices for Type C plans (the most popular Med-sup plan) varied by nearly 42 percent.
A 65-year-old person could pay as little as $737 a year for a plan sold by Blue Cross and Blue Shield of Ohio (now Medical Mutual of Ohio) or as much as $1,263 for a plan co-sponsored by United HealthCare and the American Association of Retired Persons (AARP).
For Type I plans, one of only two types that offer drug coverage, prices ranged from $1,387 a year from the Aid Association for Lutherans to $2,029 charged by Pioneer Life Insurance.
By contrast, six of the eight Medicare HMOs in Cincinnati charged no annual premium, relying on government reimbursements for their income -- yet they offer drug benefits at least as good as Type I plans plus a variety of "extra" benefits such as limited coverage for dental and vision care.
The combination of cost-savings and expanded benefits explains why local Medicare HMO enrollment has leaped from 2,200 members in 1995 to about 37,000 by the end of 1997.
The big tradeoff for joining a Medicare HMO is that members must use a limited network of hospitals and doctors. Consumer Reports did not attempt to compare the size or quality of the HMO networks. The potential benefit of Medicare HMOs is strongest for people on fixed incomes and for people who regularly need prescription drugs, Ms. Lieberman said. Those two groups actually comprise most Medicare enrollees.
About 54 percent of Medicare enrollees have an annual income of less than $15,000. They cannot reasonably afford Med-sup plans that charge $1,000 to nearly $3,000 a year, and keep going up in price. Meanwhile, about 77 percent of Medicare enrollees take at least some prescription medications each year -- making low-cost drug benefits a highly desired item.
"An HMO that's a good deal today may not be tomorrow," Ms. Lieberman said. "Premiums are changing on a county-by-county basis. In California and New Jersey, we've seen HMOs selectively pulling back on benefits."
While Cincinnati's Medicare HMOs may be better than the typical Med-sup plan, they aren't as good as the Medicare HMOs offered in Miami, Los Angeles, Denver and Phoenix.
The reason: federal reimbursement rates for Medicare HMOs vary from county to county. In Miami, payments are much higher than Cincinnati. The difference shows up directly in benefits.
For example, Consumer Reports rated six Miami HMOs as "excellent" for drug coverage while offering "extensive" extra benefits. No Cincinnati HMO got such high marks.
The United HealthCare HMO in Miami offers an unlimited drug benefit with no co-payments. It pays for hearing aids, chiropractic care and one pair of eyeglasses a year. It even pays for non-emergency transportation to and from the primary care physician's office. In Cincinnati, United's Medicare HMO has an $800 annual cap on drugs and a $10 co-payment. There is no coverage for hearing aids, chiropractic care, eyeglasses or non-emergency transportation. Ken Hoverman, chief executive for United's Cincinnati office, said many health plans face similar situations. He also said that some employers negotiate benefits for their retirees that may be different from the standard commercial plans Consumer Reports reviewed.
"All the health plans try to strike a balance between the benefits they offer and the level of reimbursement they get from HCFA," Mr. Hoverman said. HCFA, the Health Care Financing Administration, oversees Medicare and Medicaid.
The Balanced Budget Act of 1997 tried to even out some imbalances in the Medicare HMO payment system by targeting rural areas for increases and capping increases for the next five years to about 2 percent a year.
But that act by Congress has had a surprising result. In Ohio, Anthem Blue Cross and Blue Shield cited poor reimbursement rates as the reason it plans to dump about 20,000 Medicare HMO enrollees in 19 rural counties and parts of three others.
While offering plenty of shopping tips for consumers, Consumer Reports also laments how confusing the Medicare system has become -- and warns that the confusion will increase this fall once the Medicare+choice program begins.
That program will allow seniors to open medical savings accounts or privately contract with a physician as well as allow hospitals and doctor groups to form their own HMOs. Because few such programs have actually started -- and even fewer seniors know about them -- none was rated by the magazine.
"The Medicare market is very much in turmoil. But what seniors want and need is stability," Ms. Lieberman said. "There is incredible confusion out there for a population that has never understood the Medicare program very well."
