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Insurer Sales of Medicare Plans Unleash Senior Backlash

Bloomberg Prognosis

Hi, it’s John in New York. October marks the the start of insurers’ rush to sell Medicare plans to seniors. I’ll have more on that below, but first...

Today’s must-reads

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Marketing Medicare

If you’re an American at least 65 years old, get ready — a lot of people are going to want to talk to you in the next two months.

Each year starting in October, millions of older or disabled Americans select their Medicare coverage for the year ahead. The program created in 1965 as a public health plan has become a growth engine for the private insurance industry. Health insurers contract with the government to offer private versions of the plans, known as Medicare Advantage. These can give seniors additional benefits, like lower-out-of-pocket costs and vision and dental coverage. In exchange, they agree to some restrictions on what care they can get and which doctors they can see.

This year almost half of people on Medicare are getting their coverage through private plans, the Kaiser Family Foundation reports. And the Medicare-eligible population is set to grow for years as more baby boomers reach retirement.

The industry says Medicare Advantage gives seniors enhanced choices, lower costs and higher quality care. And much of the innovation in the US health-care system today is oriented around improving care for seniors on these private plans, including boosting access to primary care, better managing chronic conditions and addressing social and behavioral needs.

But the private plans also come with tradeoffs. In exchange for additional benefits or lower costs, seniors may, for example, join a plan that excludes the premier cancer hospital in town.

For the largest sellers of Medicare plans — companies like UnitedHealth, Humana and CVS Health — the annual period when people can sign up or switch their coverage is a crucial window. Insurers and brokers will fill mailboxes with offers, blanket TV with ads, and call seniors to market their plans.

But some aggressive tactics have been met with an increasing backlash. Last year, the agency that oversees Medicare recorded a record number of complaints about how private plans are sold. Some people said they had been enrolled unknowingly, while others said they received deceptive information about the plans, according to a report in Axios.

The Centers for Medicare and Medicaid Services tightened oversight of Medicare marketing, including the rules for third-party companies that work for, but aren’t part of, the insurers selling the coverage.

Some insurers have acknowledged concerns about the way plans are sold by outside brokers. “What we find in this channel is that there is a high degree of confusion,” Humana Chief Executive Bruce Broussard told investors in February. He said the company would work with outside marketers to ensure “customers have the proper understanding of what they’re buying.” Partly because so many enrollees dropped out of its plans, Humana missed its original targets for new Medicare enrollment in 2022, news that sent the company’s shares down almost 20% in one day in January.

Government overseers like the Medicare Payment Advisory Commission, meanwhile, have noted for years that the private version of the program costs taxpayers more. Concerns that the program’s baroque payment rules can be manipulated have also dogged the industry and prompted accusations of fraud from whistleblowers and the Justice Department.

The Kaiser Family Foundation, in a review of 62 recent studies, found that traditional Medicare and private Medicare Advantage plans produced similar rates of satisfaction, affordability and quality for patients.

In the months ahead, millions of seniors will make their choices, hopefully with clear eyes about what they’re getting — and what they’re giving up.

What we’re reading

Schools are struggling to help the rising number of rural students who are homeless, The New York Times Magazine reports.

A low-cost solution for sleep apnea could be an alternative to expensive sleep-clinic treatments, reports Jay Hancock in Kaiser Health News.

An ectopic pregnancy resulted in five visits to a New York emergency room and $80,000 in medical bills, National Public Radio reports.

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