The prospective system is less egalitarian than the one we have now, more stratified according to ability to pay and more expensive for those seeking treatment from some of America’s best doctors. So before this train gets any farther down the track, you need to ask yourselves: is this what you’re going to want?
The transformation of Medicare will first be felt in November 1998, when seniors should get a government pamphlet explaining the health plans available in their area. You can sign up for any one you want, regardless of the state of your health. Initially, you’ll be able to switch to any other plan at will. By 2003, however, you’ll be locked into your choice for nine months at a time. Each November you’ll get a new pamphlet and a chance to pick again.
Everyone will have access to traditional Medicare, which lets you see any doctor who takes Medicare patients. Seniors usually back this up with private Medigap insurance, which picks up some of the bills the government doesn’t pay.
Alternatively, you’ll have five other types of plans to choose from. Medicare will make a fixed payment on your behalf to whichever one you want. All of them offer the same basic health benefits, but some will dole them out more generously than others. Some will add extra services or charge extra fees.
The menu: Here’s the new Medicare menu, in brief:
Medicare HMOs–combine Medicare and Medigap in a single plan, usually with extra benefits on the side. You get whatever care your primary doctor approves. HMOs are the low-cost choice, attracting some 15 percent of Medicare enrollees so far.
New Medicare preferred provider organizations (PPOs)– encompassing doctors, hospitals and other health services. There’s usually no primary doctor. You may see any doc in the plan, including specialists.
New provider sponsored organizations (PSOs)–plans run by doctors and hospitals rather than insurance companies. In theory, these plans will free doctors to practice the way they want. In practice, they’ll still have to dole out treatment carefully to live within their Medicare budgets and still make a buck.
New, private fee-for-service plans–potentially, a gilded corner for Medicare’s elite. Unlike the three plans listed above, this one doesn’t have to abide by Medicare’s standard fee limits. The plan can charge you higher rates and higher monthly premiums. Why would you pay? Because private fee-for-service plans will probably guarantee you access to superior doctors and a wider range of treatments.
Medicare Medical Savings Accounts (MSAs)–a pilot project starting in 1999. MSAs will combine a savings account with private, high-deductible health insurance (the deductible is the money you pay out of pocket for medical expenses, before the insurance kicks in). Each year Medicare will pay a fixed sum directly into your MSA. Part of that tax-free payment will cover the cost of your private insurance. The rest can be used for medical bills or left to accumulate tax-deferred. You’ll love this program if your medical bills are low and if you can afford to pay the costs of a sudden illness for a year (after that, you can switch to another plan). Instead of saving Medicare money, MSAs will cost it $1.6 billion over four years, the Congressional Budget Office says–all payable to the nation’s healthiest and wealthiest seniors.
Medicare dropouts–for doctors who won’t accept any limits on their fees. They can write private contracts with patients of Medicare age, charging whatever they want–a practice that wasn’t allowed under former law. In the past, some of these docs refused to take Medicare patients. Now they’ll take the ones wealthy enough to pay.
Your pick: At the start of Medicare+ Choice, most people will probably stay in traditional Medicare. There, you can choose almost any doctor and pay no more than the government-prescribed fee. If money is short, you might move into an HMO, PPO or PSO, all of which may offer more benefits at a lower cost.
What boomers need to consider, however, is how this stratified program will develop over time. Will leading doctors tend to take only the Medicare patients who’ll pay higher fees? Will the docs who stay in traditional Medicare or in HMOs be perceived as low quality, even though they aren’t? We’ve seen this effect in higher education, where the more a private college charges, the better it’s assumed to be. ““Doctors’ leaving traditional Medicare is what worries me the most,’’ says Karen Davis, head of the Commonwealth Fund, which finances studies of health-policy issues.
Another question: is Congress’s long-range goal to get rid of traditional Medicare? Right now it’s a fabulous bargain: access to every hospital and almost any doctor at a limited price. But Davis says the healthier population may join the alphabet plans–the MSAs, HMOs, PPOs and PSOs. That would leave sicker patients in the traditional plan, raising its cost and driving even more people out. Over time, it could wither away.
Seen from this angle, Medicare+Choice is the first step toward a two-tier system: strict managed-care plans where medical treatment can be rationed, and private fee-for-service for wealthier people who can afford the price. (Many managed-care plans let you see doctors outside the system, but like private fee-for-service, it’s an expensive choice.)
Today every Medicare plan provides a specified list of benefits. But we seem to be heading toward a world where your plan gets a specified sum of money for every member, which may or may not cover all the care you need, says Tricia Neuman, senior analyst for the Kaiser Family Foundation in Washington, D.C. So don’t think mom and pop when the new Medicare pamphlets come out next fall. This is your plan, and the time to debate it is now.
