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On the Third Hand: Skin

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Some of your esteemed readers may be to the left of me on the political-economic spectrum and think the Commonwealth Fund is a bastion of The Man.

A lot of you are to the right of me, and way to the right of the Commonwealth Fund, and you might think the people there are a bunch of Commies.

But, wherever you are on the spectrum, I think you can all agree: Brian Biles, Giselle Casillas, Grace Arnold and Stuart Guterman have made a heroic effort to explain how Medicare Advantage funding and pricing works and explain how the federal laws now in effect would change that system.

Medicare Advantage is a program that gives private insurers a chance to sell coverage that replaces the traditional Medicare Part A hospitalization and Medicare Part B physician services coverage.

Biles, a health policy specialist at George Washington University, and his colleagues contend that Medicare program payments for Medicare Advantage enrollees were 14.2 percent higher than for traditional Medicare enrollees in 2009.

Policy changes included in the Medicare Improvements for Patients and Providers Act of 2008 cut the gap to 8.9 percent in 2010.

The analysts are predicting that, if all Medicare policies that are supposed to take effect between now and 2017 actually take effect, and work as expected, they will reduce the gap to 2 percent.

A quality bonus program could actually increase the level of payments going to the highest-performing Medicare Advantage plans, the analysts say.

That sounds great.

One thing I notice, though, as the daughter of parents who qualify for Medicare, is that the study doesn’t say anything about what the enrollees will pay, either in the form of premiums or out of pocket.

The folks at eHealth Inc. (Nasdaq:EHTH) have published a separate, much easier to understand analysis that shows what the average premium for a Medicare Advantage will be in 2013, what the average out-of-pocket maximum will be, and what the average premium will be at plans that charge a premium. 

EHealth says, for example, that 47 percent of the Medicare Advantage plans in Alabama will charge no premium to enrollees at all, and that the average out-of-pocket maximum will be $4,187.

It seems as if some of the main changes that will take place once the Medicare Advantage changes take effect is that premiums will go up, and so will deductibles, co-payments and coinsurance rates. The plans won’t be able to do as much to protect enrollees against medical-related bills.

On the one hand: Health policy analysts have been explaining for years that the country needs to give the older and disabled people who are in Medicare more “skin in the game” to get them to be better health care shoppers. If a rich Medicare Advantage or Medicare supplement plan shields enrollees too much from co-payments and deductibles, then the enrollees may well decide that a doctor’s office makes a nice alternative to a country club, the argument goes.

On the other hand: Give me a break. What ability do consumers really have to shop for care based on price, bargain for better deals or protect themselves against merciless upcoding?

I love the theory of the health saving account (HSA) coupled with a high-deductible health plan, and tried enrolling in my company’s HSA program. I found that, even though I knew all about the theory of being a great health care shopper, and even though I can generally call up and arrange interviews with high-up executives at my health insurance company and large health care systems, I could barely get a checkup billed as a checkup, let alone figure out what the billed price or the discounted price of a service would be ahead of time.

Are we really going to base the salvation of Medicare on the premise that 80-year-olds with multiple chronic conditions will be much more effective at shopping for health care?

Unless the government really cracks down and makes doctors take a simpler, more honest approach to billing, I doubt that’s physically possible.

Maybe the new accountable care organizations (ACOs) can take over the job of shopping for and managing Medicare enrollees’ health care, but it seems as if the ACOs may just get primary care doctors, hospitals and specialists into bloody fights over splitting the Medicare reimbursement, not do anything much to control the size of the pie.

On the third hand, it seems is if Medicare is careening toward insolvency, and as if the actual approach to giving seniors skin in the game may be for Medicare to collapse and for seniors to pay whatever care they can manage to pay for using their own resources. 

You have to hope the people running the ACOs will take the job seriously. If the ACOs don’t work, it’s hard to imagine that the alternatives will be pleasant.

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