One regulatory difference between traditional Medicare and Medicare Advantage
January 07, 2024
Medicare Advantage health insurance plans are touted as the same as traditional Medicare, but operated by private insurance companies. As such, Medicare Advantage plans are often pitched with extras, such as a regular allowance that can be spent on qualified medical expenses (such as toothpaste or glasses) or a gym membership. However, KFF Health News published an article about seniors discovering some important differences: Medicare Advantage enrollees lack guaranteed eligibility in Medigap plans (in most states) and more limited acceptance by providers.
Medigap plans (also known as Medicare supplemental plans) are private plans that help cover holes (or "gaps") in Medicare coverage in exchange for an additional premium. The article explains "In traditional Medicare, enrollees pay a monthly premium and, after reaching a deductible, in most cases are expected to pay 20% of the cost of each nonhospital service or item they use. And there is no limit on how much an enrollee may have to pay as part of that 20% coinsurance if they end up using a lot of care." For patients who have chronic conditions that require much care, Medigap can save meaningful amounts. Enrollees in traditional Medicare are guaranteed eligibility in Medigap plans, but enrollees in Medicare Advantage plans can have their premiums priced according to patients' medical histories. It seems that even patients who switch back from Medicare Advantage to traditional Medicare are not guaranteed the favorable pricing.
This disparity in the Medigap eligibility and pricing guarantee seems to give traditional Medicare an advantage. It is unclear if the disparity is intentional, and four states have extended the guarantee to Medicare Advantage plans. Since patients frequently do not know upfront whether they would use Medigap insurance, it seems that patients would benefit if they all had the same Medigap guarantee, regardless of whether they are enrolled in traditional Medicare or in Medicare Advantage.
Something else that would make it easier for patients to compare traditional Medicare and Medicare Advantage plans would be published metrics of acceptance by providers. If patients have a difficult time finding providers that accept their insurance plans, that meaningfully changes the quality of the insurance.
Both of these changes seem pertinent, especially as recent years have seen significant growth in enrollment in Medicare Advantage plans.