Harry Truman began the process of establishing a national health plan by asking Congress to enact legislation in 1945. Twenty years later he was the first person to sign up for Medicare under the newly enacted law signed by Lyndon Johnson. The dangers of "socialized medicine" had been debated for two decades, and now the U.S. opened the door to the first recipients of Medicare, a program for seniors over age 65 or disabled and Medicaid, the companion plan for the indigent. Medicare's design centered around two care levels. Medicare part A covers hospitals, skilled nursing, hospice and home health care. Part A is premium free but most of those who qualify will have paid for it through Medicare taxes during their working years. Medicare part B includes doctor services, outpatient services, durable medical equipment, home health and other medical services. Part B requires a premium, which in 1965 was $3 per month and today is near $100 per month. The claims paid by Original Medicare are about 70% of the total submitted by a provider. Todays general rule of thumb is that Medicare will approve 80% of the charges submitted. Of this 80%, Medicare pays a share of another 80%. For the Medicare member this amount totals about 65% of the bill. The responsibility for paying the remaining 35% belongs to the to member. There is NO upper limit cap for what could be owed. With a potential liability of multi thousands of dollars to a Medicare enrollee the first Medigap or Medicare Supplement policies offered were by Bankers Life in the early 1970's. These plans covered the excess charges for what Medicare A and B would not pay. The Medigap concept became widely accepted by the public and soon hundreds of companies were offering their own versions of Medicare supplement plans. Abuses in the market place among agents continuously "replacing" their own coverage on the basis of having an improved or better plan or needlessly selling seniors multiple plans for the sake of earning a new commission led to Federal standardization of Medigap policies in 1992. This change made it unlawful to sell multiple policies and standardized all the policies offered. An example would be that if a senior was considering a Plan "F" from company A, it would be exactly the same as a Plan "F" from another company B. With this, the buyer needed only to consider the price and the service they expected, but no longer had to worry about the difference in benefits. The change ended the problem to having thousands of plan choices from which to make. Cost shifting, those additional charges not covered by Medicare increased the pricing of Medigap plans. As time went on, Medicare cut back on the amount they reimbursed providers, doctors, hospitals, etc. This meant that the Medigap policy had to pay for these new charges resulting in raised premiums to cover these shifting expenses. The effect on seniors as they aged was that their plans became more costly. Many retirees on fixed incomes felt the economic pressure and dropped their coverage. The irony was, at a time in life when they would more likely need insurance, they didn't have it. As a result of the Balanced Budget Act of 1997 the first alternate to a Medicare Supplement plan became available. Known as Medicare+choice plans these offered a senior the option of receiving benefits from a private company. With the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 the plans became known as Medicare Advantage. Medicare Advantage plans are not Original Medicare or Medicare Supplements. Private Companies contract with the government to offer benefits that are at least equal to or greater than original Medicare. Typically they are low-cost or premium free. The amounts that a senior pays are the co-pays at the time of service. An example would be a $20 charge to see a physician or a $150 charge for one day of hospitalization. Co-pays vary among companies. The plans generally have a limit on the out of pocket total paid per year. These may be from $2500 to $6700, again, depending on the company offering the coverage. Many of these plans include Part D prescription drug coverage as well the medical benefits. Medicare Advantage plans have become enormously popular but, the future of the Medicare Advantage program is in doubt. The GAO, in April 2012 released a report calling for the end of Medicare Advantage on the basis that it is unsustainable financially for the government. Election years should provide a safe harbour for MA plans but beyond that it will be anyones guess as to how they survive. They are loved, and as the baby boom generation moves to retirement age their popularity will only increase. Retirees, choosing between their own care and the governments penchant for funding aid and government subsidies worldwide, would be wise to bring these concerns to the attention of their Federally elected officials. The voting booth is a good place to send a message from. Terryl G. Roemer has helped seniors with their Medicare choices for over 30 years. In todays marketplace Medicare enrollees are wise to review the changes in Medicare plans and services. We can no longer count on one plan meeting our needs year after year. Study, research and ask questions to make sure you are getting the most value from your plan coverage.
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