Dr. Kevin Most: Medicare
Do we all understand the basics of health insurance. Is there such a thing as basics of health insurance? For the complexity of what we do each day in the hospital it is amazing that the way hospitals are paid is even more confusing. Let’s try in a few minutes to at least talk about the basics. Let’s lump them into big buckets and then look at breaking them down further.
First Medicare. In 1935 The Social Security Act was signed. FDR thought about putting healthcare in to the Act, but the middle of the depression impacted that decision and it was left out. Universal health insurance surfaced again during President Truman’s State of the Union in 1949, during this speech he laid out his Fair Deal ideas, which included education, healthcare and fair employment. Unfortunately his ideas although great were not advanced while he was in office. The term Medicare was first a program starting in 1956, providing healthcare to families and individuals serving in the military. In July of 1965, President Johnson enacted Medicare to provide health insurance to people age 65 and older. Out of respect for the individual who first considered this, the law was signed in the Truman Library in Missouri with Former President Truman present.
Medicare- Believe it or not Medicare is a mere 53 years old. It was started by President Lyndon Johnson in 1965. It initially was started as a way to make sure Seniors had access to health care. Initially it was restricted to individuals over the age of 65 and cared for the hospital portion of the healthcare expense. It has expanded over the years to also provide insurance to some individuals with disabilities, as well as an expansion on the scope beyond just hospital care. Medicare has evolved into essentially four parts with each part well defined as to what it covers, it’s optionality and it’s cost. You all have probably heard of Medicare Parts A B C D. To keep it somewhat simple we will go over each briefly.
Medicare Part A- this is the portion of Medicare that covers hospital care and skilled nursing care. Most individuals will not have to pay a premium for this as they paid for this while they were employed, for those of you still working note in your paycheck deductions the Medicare line. Now there is a deductible that must be paid each year of a little over $1,100. Medicare covers about 80% of the inpatient costs and that is why many will look to add a Medicare supplement to protect against those costs.
Medicare Part B- This is the portion that helps pay for a portion of your doctor’s office visits, tests, home care, rehab, medical equipment and some procedures. Now part B is optional and does have a monthly premium cost as well as a small deductible.
Medicare part C- This was initiated under President Clinton in 1997, it is the private insurance plan in Medicare. You may have heard of Medicare Advantage. In Order to obtain Part C, you must be enrolled in Parts A and B. Part C covers at least as much as the basic Medicare but also covers things not covered like vision, dental and some medications. These plans vary and are offered by independent insurance companies not the federal government.
Medicare Part D- In 2003 President Bush added part D to help with the rising cost of medications that many seniors were supposed to take but could not afford. This portion also has a premium attached to it, often a deductible and also a co pay for many medications.
Confused ??? Well now let’s confuse you a bit more as we discuss Medicaid.
Many think of Medicaid as a federal health plan as well, but this just to confuse us is a mixed plan between federal and state, also rolled out in 1965 to help provide insurance to the low income families and individuals. So each State has its own plan, and the funding, eligibility and coverage is different in each state, so it is not as portable as one would think. In the state of Illinois, we spend over $ 20 billion dollars a year on Medicaid. The federal government pays $1.05 for every dollar we spend from the Illinois budget. Due to the expansion the federal government pays 60% of the $20 billion dollars and Illinois is responsible for the other 40 %. In Illinois 70% of all federal funds received is for Medicaid. Not only is the cost split differently for each state, each state has the ability to make its own rules on eligibility, benefits and how the delivery system is set up. Wisconsin for example has a much higher federal match, they receive $1.41 from the federal government for each $1 they spend on Medicaid. One large concern is the increased cost of long term care as it is not a Medicare benefit. Healthcare does take up a substantial portion of our state budget, approaching 30% of the total budget.
This plan has also grown to provide care to some sectors of the elderly as well as the disabled. The Affordable Care Act expanded the eligibility and millions of individuals who before had no insurance were now eligible for Medicaid, yet some of these individuals did not qualify for the federal subsidy. Those individuals were placed in a tough spot as they made too much money to qualify for Medicaid and for the subsidy. Many of these individuals lived check to check and paid the ACA fine instead of going out and buying insurance on the Marketplace.
One other large impact on Medicaid Patients is the concept of Public Charge. To put it simply individuals who are going thru the lawful immigration process need to show that they can essentially be self-sustaining and that when they come in as a citizen they will not rely on public assistance or government funded long term care. Currently many of these individuals are receiving Medicaid benefits. The current policy does not “count” health care benefits from Medicaid as a “public charge”, thus the need for health insurance as they go thru the process is not deemed to hurt their ability to gain citizenship. The Trump Administration has proposed a rule that would consider health benefits and some nutritional benefits provided thru Medicaid as a “public charge”. Because of this proposed change, many going thru the immigration process may stop using the Medicaid system and go without insurance, in order to avoid any roadblock that may be placed on their way to citizenship. This is concerning to patients as well as doctors and hospitals as those patients who need care and are eligible for care under Medicaid currently are refusing to sign up for coverage. This can be devastating to this vulnerable population. This will be decided sometime in the next few months.
Commercial Insurance- If I were to say Blue Cross…. You would say Blue Shield, but it has not always been that way. In 1929 Blue Cross started in Texas, it was an insurance plan that you could buy for $6/ year and it would cover you for 21 days in the hospital each year. 10 years later in 1939 Blue Shield is formed and it is an insurance plan to cover physician services in the office. It was not until 1982 that the two organizations merged to form Blue Cross Blue Shield. Currently there are 10 Blue Cross Blue Shield companies covering more than one state and another 30 plus that are specific state or area Blue Cross Companies. The largest is Anthem which is a Blue Cross company covering 12 States. In Illinois Blue Cross insurance is thru a company Health Care Services, which has the Blue Cross Franchise in 5 states.
If you thought Medicare and Medicaid were confusing just wait. We have “traditional” insurance and that is broken down in many different ways, between PPO’s HMO’s, High Deductible and other plans. Over the past 10 years we have also seen a few unique types of “insurance” some are called subscription plans and others concierge or personalized medicine. I will explain those first as they are easier and also they explain a bit of the frustration that you are seeing from physicians.
Many doctors are pretty frustrated with the amount of paperwork needed to be paid for their services. Filing claims, awaiting payment, arguing with insurance companies…. It can get quite time consuming and aggravating. This has caused or allowed some physicians to look at their delivery of care differently. The 2 main types include a monthly subscription plan and concierge. The two differ slightly. For the concierge or personalized plans, physicians charge a yearly fee to a small group of patients. These patients then have access to the physician 24/7. Many of these physicians do house calls or go the patients office to make the medical visit as convenient to the patient as possible. This plan is often thought of as a plan for the wealthy as the physician will also bill the insurance company for their service on top of the yearly fee. The physician limits the size of their practice so that they are always available and are able to spend more time with each patient.
Subscription care is a bit different, patients pay a monthly fee to the doctor for unlimited office visits as well as discounts on some medications and tests. For most of the subscription plan doctors there is no billing of insurance, they are content with the collection of the monthly fee. Many patients are now considering these plans and coupling them with a very high deductible plan for catastrophic issues. Advocates say that the good side of this is the transparency that patients receive. There is a fixed amount and thus no surprises. Lab and medication prices are posted and often discounted down to the doctors cost, much different than the current system of having no idea how much an office visit will cost or how much a lab will cost. The traditional doctors often have to say I can’t tell you what the cost will be as it is based on your insurance, your co pay, your deductible etc. Subscription service is clear, monthly cost known up front and a menu of labs and medications with very clear pricing. These plans have been growing rapidly across the country and show no signs of slowing as physicians are getting burned out trying to deliver great care while also seeing 30-40 patients a day.
The ripple effect of this may be huge. We have discussed the looming primary care physician shortage which is being felt already, now couple this with physicians who decide to practice with a much small group of patients and one can see that this will only make the shortage larger and accelerate the timeline for this shortage. The impact will be felt across the country from urban to rural areas. It is also very interesting that the generation of physicians completing their training now are more interested in work life balance than previous generations, this is not unique to the medical field but the impact may be felt more as the supply demand is controlled by limited number of spots in medical schools and residency programs.
Now how about “Traditional” insurance
You may have heard the term Narrow Networks, for the commercial insurance a Narrow Network is a description sharing that there are limited physicians in the network and fewer hospitals as well. If you hear that term make sure your primary care physician, specialists and hospitals are included in that plan
Each year many of us are faced with the task of picking the insurance plan that we will fall under for the next year. Seems like a simple thing to do, right, check a box and move on to more important things like the change in vacation policy or cafeteria pricing, but hold on a second, do you know the implication of your check box. Many may look at just the monthly cost that will be deducted from their check without understanding what that check box means. Hopefully we can take a few minutes and explain a few things so that your decision fits your medical needs and medical expectations
For those of you who have a doctor and a hospital you like and use, one big consideration point is the concept of “in Network”. What this means is that both your doctor and the hospital have signed a contract and they accept your insurance product. This is important as doctors and hospitals who have not agreed to a contract are considered “out of network” and the insurance plan will cover less or perhaps none of the treatment you receive, and you will be responsible to pay for your care or switch to a physician who is included in the plan you chose.
One way companies are looking to lower the cost of insurance is to offer high deductible plans. This concept is no different from your auto insurance, it is essentially a question of risk and cost. How much are you willing to pay for care until your deductible is met and your insurance kicks in. Many companies are pushing this as it lowers their cost as well. It may be a great plan for those who are young and rarely need medical care, but you have to understand many people do not have the $10,000 in savings that they may need with a high deductible plan. This is a calculated guess, which is not a good strategy when it comes to one’s health. Those with large deductibles will often postpone healthcare as they know they are responsible for the large upfront cost. The other thing we see with this insurance is that once an individual has hit their deductible they will push to get as much done as possible as they feel entitled to that having hit the large deductible. In the medical field we see this in the November and December rush as people decide to get care they have been putting off due to monetary decisions and hospitals are filled with elective surgeries and postponed screening tests.
So is it important that we know the difference from a HMO and a PPO? A HMO, is a Health Maintenance Organization, this is essentially an insurance product that tries to shift the risk away from the patient and employer and directly on the doctor or in some cases the hospital. What happens with a HMO is the insurance company collects a premium from you and then they pass a portion of that on to the physician on a monthly basis. This is paid to the doctor regardless of if you went to the office 20 times or did not go at all, they payment does not change. The patient often has no deductible but may have a small copay. The idea was that doctors would be incentivized to keep you healthy and out of the office and the ER. These plans also keep the primary care doctor as the “gatekeeper”, it is often their decision if you can see a specialist or go to an emergency room for care. These were very popular 10-15 years ago and then fell out of popularity. They are starting to come back as companies are looking to rein in costs as much as they can. The HMO shifts the risk to the doctor and away from the employer and insurance company as they have their fixed cost set. Some hospitals take this a step further and accept all the risk for all care included hospitalizations, surgeries etc. If you are considering a HMO plan, make sure your doctor and hospital are in the HMO as they do not allow the patient to choose a physician outside of the plan, or receive care at a hospital not contracted with the HMO plan. These plans are often the lowest cost plans for companies that offer multiple plans.
PPO is the acronym for Preferred Provider Organizations. These are often very broad based with many physicians as well as hospitals in the plan. These plans are much more flexible than the HMO plans and are thus often more expensive per month premium. These plans are less restrictive and the patient can often go to a specialist without the referral from a primary care physician. They often have a copay and deductible associated with them, a cost of choice. The goal is to have you see physicians who are in the plan and have agreed to a contract, so your choices are limited. These plans often will allow you to see a physician not in the PPO but often only paying a smaller amount, leaving the patient responsible for the remainder. Often physicians outside of the PPO will ask for payment and then have you submit for your reimbursement from the insurance company.
So it is a tough decision and one that should not be taken lightly. Considerations include your monthly premium, your need to see specialist, your desire to see a specific physician and most importantly your overall health.