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Author: TwoCybers Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 19218  
Subject: Re: Medicare, anyone? Date: 10/15/2012 7:06 PM
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Brooklyn me thinks you need some information and less "facts" from people with political agendas.

Medicare Advantage is a version or part of medicare. In traditional Medicare premiums paid by those receiving benefits were/are paying 25% of the total program costs. The reminder of the program costs are paid by deductibles, co-pays and payroll taxes. A person who signs up for traditional Medicare will get at no cost something called Part A -- this is hospital coverage. It may have a deductible of a few hundred bucks, but with a typical hospital stay (not counting ER) costing over $1,000 a day - the deductible is not really an big part of the cost. Medicare also has a Part-B -- this is for physicians, office visits and just about everything else (including physical therapy, wheelchairs, etc.) that is not specific to a hospital stay. There is a Part-B deductible that is about $300. Additionally Medicare Part-B only pays 80% of the total net bill. (As you undoubtedly know all the medical people have a Rack Rate and then a much lower real rate for anybody with insurance.) Medicare pay 80% of the Medicare approved cost.

More recently there is Medicare Part-D that is drug coverage.

Medicare Advantage is a single policy that takes care of Parts A, B and D with a single premium (which may be zero to the retied person).

Prior to the Advantage plans, people on Medicare paid the 20% our of their pocket or get a Medicare Supplement (aka Medi-Gap) insurance policy. These polices are given letters to identify them. All "C" or "N" or what ever policies must offer a specific set of coverages. There are minor differences between the AARP "C" policy and the AETNA "C" policy, but unless you have a specific need for replacement glass eyes or what ever AETNA adds to their "C" policy, customer service and price are the only real differences between two Medicare Supplemental Policies.

I won't get into here - but be aware, you are only guaranteed only one option to get such a Medi-Gap policy. After that one time, the insurance companies can accept you, reject you or charge you any rate they want. (There are exceptions, but there are narrow and very specific.)

OK the supplemental policies cost in the range of $100 to $200 a month which is not trivial to folks who are living on social security.

Somewhere along the line the idea of advantage plans was developed. When all is said and done, here is how they work. A person signs up for Advantage insurance Company #1 The Federal government pays Company #1 what ever the average for all other medicare folks cost for Parts A. Also there is a Part-B premiums which for 95% of folks is currently $99.90 per month. That money goes to Company #1. In exchange for all that money, Company #1 pays all the medical costs for its policy holders. For a variety of reasons, Congress decided to give an additional capitation rate (several hundred dollars) per person per year signing up for Advantage plans to Company #1.

Obviously the AETNAs, United Healthcare, Hummanas, etc. of the world thought getting all that money (premiums plus capitation funds) offered a chance for profit and they started offering Advantage Plans. There are several. They are not all equal like the Medi-Gap Supplemental polices. One may be cheaper. Another may have advantages for those who are frail and need more in home care in the later years. Read the fine print!

Note - This capitation money is the $716 Billion dollars either the Ryan budget or the Obama budget is "stealing" from Medicare - sort of depends on you political views as to who is talking about taking medicare funds.

Now why do folks want Advantage plans -- the cost is less for the same coverage one get with all traditional Medicare plus the Medi-Gap insurance. If I can have a Lexus for the cost of Ford Focus, it has appeal - not hard to understand.

Although no one has publicly admitted it, if you look at the situation currently there is a payment from traditional Medicare funds to the Company #1s of the world. If that payment ends, the choices for Company #1 are not pleasant for Advantage plan people. Company #1 may (I don't know) be legally allowed to charge a higher premium. Company #1 certainly can restrict the insured choice of doctors, hospitals and drugs. In short Company #1 can start running thins like the HMOs of the 1980s.

You commented about Obama gutting Advantage plans and killing them. If you consider stopping a transfer of funds form the traditional Medicare system to provide a capitation for Advantage Plans "gutting' advantage that is part of current law. But before you blame it solely on Obama, keep in mind it was part of Ryan's budget plan that the Tea Party folks in the House all loved a few short months ago.

We have a healthcare cost problem in this country. People feel entitled to best medical care money can buy. If a new cancer drug comes out that extends life by 30 days -- people demand that drug and don't care if the incremental cost of $100,000 a year.

People need to seriously answer the question, how much would you personally pay for 7 days of life? Would you personally give up your house and retirement funds? Would you leave a spouse destitute should you could have a few days or weeks of life?

These are not easy of simple choices.

But to get back to your concerns - Medicare is not going away. Advantage plans are not going away. Both options will change. You can expect increased costs. If you pick an Advantage Plan and your insurance company goes out of the insurance business, you will be given an option to select some Medi-Gap and some Advantage plans. Pre-existing conditions will not be a factor. But there may be some limitations. For example I have a friend who was in a Medicare HMO and her insurance company quit the business. She was given the option of several AARP Medi-Gap policies - but not every policy. There were two out of maybe 15 she could not select.

I do not know all the details of the current healthcare law. It is possible the initial Medi-Gap policy window has changed. But the One Bite at the Apple limitation I mentioned above is how it worked prior to the Obama healthcare law.

One other thing, in my experience, very few retires understand, despite all the co-pays, premiums and deductibles they pay -- that is way less than 30% of the total cost of the medicare money paid to hospitals, doctors, pharmacies, etc. Last time I checked there was no free lunch and I think it fair to say retires as a group cannot pay for what they are getting now. So folks are going to have to accept rationing either via cost (buy what you want) or via a bureaucracy.

I hope this gives you some help and background.

Gordon
Atlanta
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