Medicare and Medicaid memberships make up a third of the company’s health insurance business. It added 655,000 Medicare Advantage members and 570,000 Medicaid members in the quarter.
Source: UnitedHealth expects Medicare membership gains to boost 2023 profit [1]
Most think that because Medicaid is a government run health insurance/payments program, that it is run by the government, but much of Medicare is outsourced to private sector organizations. For example, about 75% of Medicaid patients are managed via private insurers that are contracted by governments.
29% of newly eligible Medicare patients sign up for Medicare Advantage, which is basically outsourced Medicare, privately managed by insurers. (But the percentages vary widely by state.) Over time, about half of all Medicare enrollees end up in Medicare Advantage.
Original Medicare
“Original” Medicare is the government run Part A (hospitalization coverage), Part B (doctor’s office visits, labs, etc), and Part D (prescription drugs). As long as you have at least ten years of creditable work experience, you qualify for social security and Medicare Part A (no additional charge for Part A – you’ve pre-paid that through your Medicare pay deductions during your working years.) Recipients pay a monthly premium for Part B and Part D, that is on a sliding scale based on your income. With Part A, B and D, you have access to any health care provider, nationwide, that accepts Medicare insurance.
Medicare Advantage (MA) is private insurer re-packaging of Medicare Part A, B and usually Part D, plus with added benefits added by the insurer. Your billing interactions are then with the insurer, and not with Medicare. For some people, MA plans are beneficial, but for others, not so much. MA plans come with narrow provider networks that provide insurance for access to local or regional areas, plus many plans have co-pays and deductibles that may be unexpected. Plus, they may require a referral to see a specific provider or specialist (Original Medicare does not require referrals).
MA Restricted Provider Networks
My current insurer has an “in-network” set of providers in 4 states; outside of those 4 states, coverage is for just 50% of expenses as providers are “out-of-network”. If you were faced with a serious health problem requiring hospitalization or surgery, while traveling elsewhere in the U.S., you would be on the hook for 50% of all costs out of your pocket – which could be tens of thousands to hundreds of thousands of dollars for a serious emergency. If you don’t travel, this might not be an issue and MA plans could be of good value to you.
MA plans usually require “per-authorization approval” before many procedures – approvals can in some cases take months to receive and “there’s compelling evidence that for-profit insurers wrongly delay and deny care a significant amount of the time“.
MA plans can be attractive for many elderly but whether they are for you or not depends on your lifestyle and situation, and how often you seek access to health care providers. For example, if you live in a more rural area, the number of “in network” providers may be far less and some treatments may require long distance travel to reach an “in network” provider. In my county, only about 20% of customers are on Medicare Advantage whereas on the west and more populous side of the state, 60-80% are on Medicare Advantage.
Medigap
Finally, there is Medigap for which you pay a monthly fee in exchange for paying smaller or no co-pays or deductibles. Medigap also extends the maximum coverage for hospitalization (1-year cumulative lifetime coverage for standard Medicare, becomes 2 years with Medigap, and may also provide some long-term care benefits). For us, coming from an ACA marketplace plan with a shocking $17,600/year deductible, paying the modest deductibles of Medicare isn’t something that concerns us. Medigap is purchased separately from Part A, B and D.
Other Options
About 1 in 5 people in Medicare recipients are in group plans managed by their union or employer pension program and some of these group plans are managed through Medicare Advantage.
Changing Plans
Once per year, customers can change between Medicare, Medicare Advantage and Medigap, although there can be pre-existing condition restrictions on Medigap policies sold after the first year of eligibility for Medicare.
We will likely end up with original Medicare Parts A, B and D and not get MA or Medigap add-ons.
[1]Disclosure: I own shares of stock in United Healthcare which makes a large amount of its revenue from MA plans.
