When retired veterinarian Richard Timmins went on a Medicare Advantage plan in 2016, he admits that he knew very little about Traditional Medicare (also called Original Medicare) or the more than 3,800 Medicare Advantage plans that are marketed to seniors and the disabled.
“I went to a so-called Medicare Information Session and took the recommendation of the speaker and ran with it,” Timmins told Truthout. “I did not know that he was paid a commission for every person he signed up for a plan. The issue for me was cost.”
Like other Medicare beneficiaries, Timmins knew that the standard premium for Medicare coverage — $164 per month in 2023 — would be taken out of his monthly Social Security checks. He also understood that there would be a $226 annual deductible for Part B, which covers doctor’s visits, but after that deductible was met, Traditional Medicare would pick up 80 percent of the cost of his care. What’s more, he knew that dental, optical and audiology were not covered by the plan and that he would be responsible for paying the remainder of his health care costs — 20 percent of the total — out of pocket unless he purchased a separate, costly Medigap insurance plan.
Not surprisingly, when Medicare Advantage promised broader coverage for less money — the same deduction would be taken from his Social Security check, but he would not need a supplemental Medigap plan since Medicare Advantage (sometimes referred to as Plan C) would provide coverage for most of the services that Traditional Medicare did not offer — Timmins quickly signed up. That’s when his nightmare began.
After his primary care physician noticed a lump in his ear, Timmins was told that he needed to see a dermatologist. “I have a family history of skin cancer, so I tried to make an appointment right away but was told that I needed prior approval from my insurer to see the specialist,” he said. “It took seven months to get this approval and, in that time, the growth tripled in size and became painful. I finally had surgery to remove it in 2022. Had I been on Traditional Medicare, I would have quickly seen the dermatologist and the oncologist since prior approval is not required. I would have had the lump removed when it was smaller, before it extended into the tissue.”
The experience was eye-opening for Timmins and he is now an active member of Puget Sound Advocates for Retirement Action. Now knowledgeable about the nuances of different Medicare plans, he is eager to share his experience and discuss why Medicare Advantage can be so deceptive and dangerous.
So, What Exactly Is Medicare Advantage?
Although thousands of different Advantage programs exist, most are run by seven private, for-profit insurance companies: Centene, Cigna, CVS-AETNA, Elevance, Humana, Molina and UnitedHealthcare. By 2023, UnitedHealthcare, which is related to AARP, controlled 29 percent of the market; Humana controlled 18 percent and CVS-AETNA controlled 11 percent.
They’ve cashed in. This year, 30.8 million people — 51 percent of those who are eligible for Medicare — are in Medicare Advantage programs, and the reason is obvious. Like Richard Timmins, most retired and disabled people need to keep costs down.
According to the National Institute on Retirement Security, Social Security is the sole source of income for 40.2 percent of retired people in the U.S. For 49.4 million retirees and their 2.6 million dependents, this means an average monthly payment of $1,837; for 7.5 million disabled people and their 1.2 million dependents, the average monthly allotment is $1,489.
Small wonder that when cheaper and seemingly more-extensive Medicare coverage is offered, people grab it. But like Timmons, they usually know little-to-nothing about the downside of the coverage.
So how did we get to this point? To understand the Medicare program’s evolution, we need to go back 58 years, to 1965, when a bill to create a publicly funded Medicare (and Medicaid) insurance plan was proposed by President Lyndon B. Johnson. The bill was part of his Great Society program, and within a year of congressional passage, a wholly government-run Medicare program was providing health coverage to almost all Americans over the age of 65 — 56 percent of whom had had no coverage whatsoever before its passage. Patients with end-stage renal disease were added a year later.
But while Medicare was greeted with near-universal praise, there were always gaps in coverage, with no payment for long-term care, dental, optical or audiology services.
This is where Medicare Advantage comes in. The program was fully launched in 2003, during the administration of George W. Bush. The impetus was cost containment. According to the Be a Hero Fund, an advocacy organization founded by the late health care activist Ady Barkan to push for expanded, government-funded home care and community-based services, Bush and his supporters argued that the private sector would reduce costs by managing care more efficiently.
That has not happened.
Rachelle Kivanoski, a retired former home care administrator, told Truthout that the problem with Medicare Advantage plans, and managed care more generally, is that they are really about managing cost, not care. “People who are in reasonably good health can benefit from Medicare Advantage,” she said, “but as soon as they have greater medical needs, they see problems, including delays in receiving authorization for services or the outright denial of care.”
For example, she reports that patients who’ve had hip or knee replacements often have to wait weeks for physical therapy to be approved. “This can have an adverse impact on healing and mobility,” she explained. “In addition, Medicare Advantage plans rarely authorize home health aides and if they do, they only do so for a week or two at a time. Under Traditional Medicare, you keep receiving services until your doctor says you no longer need them. This means you don’t have to deal with constant reauthorization.”
Then there’s the issue of upcoding, a policy by which Advantage plans make patients seem sicker than they are so they are able to increase their fees — in essence, overcharging the government for services that are not being provided. The upshot? The Medicare Payment Advisory Commission, an independent agency that advises Congress about Medicare, estimates that Medicare Advantage plans collected $124 billion in overpayments between 2008 and 2023.
If you’re shocked by this, you’re not alone: Congress and the Department of Justice (DOJ) have also begun to take notice. A still-pending bipartisan bill, The No Unreasonable Payments, Coding, or Diagnoses for the Elderly Act — the No UPCODE Act — was introduced in March to amend Title XVIII of the Social Security Act to ensure that reimbursement is restricted to relevant treatment.
Meanwhile, since 2022 the Department of Justice has twice levied fines against Cigna, collecting $172 million in one case and $37 million in another because of fraudulent billing. Cigna, of course, is not the only villain — all told, the DOJ collected more than $1.7 billion during fiscal year 2022 for false Medicare and Medicaid claims.
Too Little, Too Late
Although this sounds like a win for accountability, health care advocates say that the fines are a drop in the bucket, and that upcoding, denials of needed care and authorization delays remain ubiquitous. Deceptive ads, on TV and through direct marketing phone calls, are a particular concern, especially during the open enrollment period that comes around every autumn.
Cheryl Kunis, an emeritus clinical professor of medicine at Columbia University and the director of national issues at Physicians for a National Health Program, zeroed in on advertising that uses sports figures like Joe Namath to shill for plans that make promises about amazing benefits, often at no cost to consumers. “For many retired or disabled people who are living on Social Security, the Traditional Medicare premiums for Part B doctor visits ($174.70 per month in 2024) and Part D prescription drug coverage ($55.50 per month) are significant. People are drawn into Medicare Advantage because it is cheaper,” she said, citing the premiums for 2024. “There are often no deductibles and it provides things Traditional Medicare does not, like transportation to and from medical appointments; a free Silver Sneakers gym membership; and dental, optical and hearing care. A few have no copays for primary care visits.”
At the same time, Kunis told Truthout, private equity firms and insurance companies see Medicare as a “bonanza.” She calls it “Medicarelessness,” but understands why investors and low- and moderate-income people are drawn in. “Everyone needs health care. It’s a recession-resistant industry,” she said. “But when private equity firms buy health care organizations, despite promises of greater efficiency, costs continue to rise. Private industry spends about 18 percent of its revenue on administration and overhead while Traditional Medicare spends 2 to 3 percent.”
That said, Kunis concedes that she believes Medicare Advantage is here to stay. “The only way we can move people away from Medicare Advantage is to make Traditional Medicare stronger,” she said. “This means lowering the costs to consumers and adding the ‘perks’ that Medicare Advantage offers.”
Alex Lawson is executive director of Social Security Works, a Washington, D.C.-based group working to strengthen Social Security, Medicare and Medicaid and promote health care as a human right. Lawson agrees with Kunis but sees this as a David vs. Goliath struggle against a powerful adversary. “Every year the health insurance industry circulates a sign-on letter to every member of Congress asking them to affirm their love for Medicare Advantage. The signed letter is then circulated to the Centers for Medicare & Medicaid Services, the federal body that oversees the programs. It also goes to Health and Human Services and the administration. Most years they get 400-plus signatures. This is the engine behind Medicare Advantage,” Lawson told Truthout. “The billions of taxpayer dollars that they rip off taxpayers each year are ignored, forgotten. Basically, these companies see U.S. taxpayers as a cash cow. Yes, there’s been some pick-up in the last few years to collect overpayments and improve Medicare, but we need to upend the whole business model of privatized health care.”
The government, he told Truthout, gives Advantage plans a flat fee for each person who enrolls. “They make enormous profits when they provide insurance to healthy people, but those who need care the most can die if care is delayed or denied,” he adds.
Fixing this, he says, will require both long- and short-term strategies. Short-term goals include pushing for reforms like passage of the No UPCODE Act; fining “bad actors” who overcharge for undelivered or delayed services; reining in deceptive advertisers whose promotion of Advantage plans provide a skewed and incomplete picture of coverage; and making Traditional Medicare competitive by offering the same services offered by Advantage plans.
”Right now, low- and moderate-income seniors and disabled people do not have a real choice,” Robby Stern, president of the education fund of the Puget Sound Advocates for Retirement Action, told Truthout. “They go for Medicare Advantage because it lowers the premiums they have to pay. These private insurance companies are making money hand over fist, and the only way to level the playing field is to limit what people have to pay out of pocket for Traditional Medicare.”
If Traditional Medicare can offer the same benefits as Medicare Advantage, Stern says, “we will win the battle against privatization. But if we do not expand Traditional Medicare coverage, private insurers and equity firms will continue to plunder the Medicare Trust Fund that workers pay into and Traditional Medicare will continue to shrink.”
It’s a grim assessment.
At the same time, Stern is keeping his eye on the big picture and is simultaneously working to promote a national Medicare for All health care program. He’s not alone. A wide range of advocacy groups — People’s Action, the Center for Popular Democracy, Physicians for a National Health Program, Social Security Works, Public Citizen, National Nurses United, Be a Hero and Puget Sound Advocates for Retirement Action among them — are working to pass a publicly funded Medicare for All bill in Congress. The legislation currently has 14 sponsors in the Senate and more than 100 in the House.