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Lately, it seems that to know Medicare is to hate it. Just ask doctors, hospitals and retirees. Well review why and then look at how producers who serve the senior market can respond.

Medicare has gone through a sea of changes in the past, but for the most part, these changes were invisible to beneficiaries. The pain of lower Medicare payments, for example, was absorbed by hospitals and other providers. In fact, physician reimbursements from Medicare fell 5.4% in January 2002.

Imagine if that same model were applied to insurance agents. If the commissions on the products were cut, initially you might work harder to maintain your income. If they were cut again, you might decide not to sell that product anymore.

Thats exactly what is happening with Medicare providers. In response to drastic, recent cuts in Medicare reimbursements, doctors are responding with their feet–i.e., refusing to take Medicare patients. One study says 21.7% of physicians surveyed in June 2002 reported they no longer take new Medicare patients, a 28% increase from a year ago (see American Academy of Family Physicians at www.aafp.org/x14993.xml).

This is a huge problem for seniors entering Medicare and for those already on it who want to change doctors, relocate or leave a Medicare Part C plan (also called Medicare + Choice) to go to traditional Medicare.

Fewer docs arent the only problem seniors face. In both the public and private sectors, many retirees have had health coverage paid by their former employers. This insurance acted as a Medicare supplement for them. Now, the party is over; thousands of retirees are finding this benefit has been or will be cancelled.

The retiree health care problem is not limited to unfortunate retirees of highly publicized corporate scandals and bankruptcies. Across the country, towns and states are responding to lower tax receipts by discontinuing health insurance for retirees.

These seniors must now search for Medicare supplements or Medicare Part C, usually Medicare HMOs.

Unfortunately, the Part C hunt may turn up little or no solution. Thats because there are fewer Medicare HMOs around today. In recent years, in fact, many thousands of Medicare beneficiaries have been shocked to receive notices in the fall, informing them that their Medicare HMO has decided to discontinue the plan, effective January 1–yet another health care problem for seniors.

The HMO withdrawal problem is rampant in many areas of the country. It seems like a frightening form of musical chairs, with seniors shuttling from one plan to another, hoping to get a good spot and scared they wont. Access to their favorite care providers is often interrupted, and out-of-pocket costs can skyrocket.

Halloween is supposed to be a scary time for little kids dressed as ghosts and goblins, not for their grandparents!

An important development on the Medicare front is the year-old Department of Defense program called “TRICARE-for-life.” A federal government-funded program, it provides wraparound coverage for Medicare, with no premium, to over 1.5 million uniformed services retirees, family members and survivors. It also offers a separate drug program. According to DoD, in the programs first year, it received over 30 million claims, and paid out more than $1.7 billion in benefits.

Now, lets look at the meaning of all of this for financial advisors.

Trends in Medicare are resulting in growing out-of-pocket costs for many seniors. These costs may include such items such as prescription drugs, Medicare supplements and eye exams.

Seniors who feel squeezed by an increase in monthly expenses may benefit from a variety of financial products. These may include prescription drug plans and investment or insurance products (such as annuities, life settlements or reverse mortgages) designed to increase the persons monthly cash flow.

The world has changed for all of us, in the wake of corporate scandals, the bear market, terrorism and possible war. Distrust of institutions is rampant. In such an environment, the professional advisor has a tremendous opportunity. Like the beloved accountant who helps the consumer deal with the Internal Revenue Service, the advisor holds the clients hand as he or she deals with government programs and financial instruments.

Its been reported that people hate Congress, but love their own representative. Do your clients love doing business with you? Then, youve probably marketed yourself and conducted yourself not as a salesperson representing large companies, but as a champion for your clients. Smart advisors are doing this in their seminars, newsletters, statements in the local press and elsewhere.

Seniors, their adult children, and their legal and tax advisors are hungry for information on programs such as local Medicare HMOs, state pharmacy programs, free SHIP (State Health Insurance Assistance Program) counseling for low-income seniors, long-term care insurance, and products covering expenses not covered by Medicare.

The insurance agent who writes and publicly presents on these issues will not only perform a great public service but will stand out among his or her competitors.

, CSA, is president of The Long Term Care Learning Institute, Plymouth, Mass. Her e-mail address is md@marileedriscoll.com.


Reproduced from National Underwriter Life & Health/Financial Services Edition, October 28, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.