Medicare beneficiary in financial trouble

I got a phone call the other day from a man on Medicare who is in big financial trouble because of the 20% of his medical bills that Medicare doesn't cover. He has limited income ($1100 per month) and gets help with his drug costs, but he never got himself a Medicare Supplement plan to cover the 20% co-insurance and deductibles in Medicare.

Last month he was rushed to the hospital in an ambulance. Upon arrival at the hospital he was told he needed to pay the Part A deductible of $1,068 in order to be admitted. After three days in the hospital undergoing multiple tests he got a bill for thousands of dollars for his 20% of doctor services and lab tests. He was shocked because he thought he had coverage through Medicare - which he did - and he was surprised to learn how much his 20% co-insurance would be.

This man is a good candidate for a private Medicare insurance plan which would have limited his co-payments. Private plans, called Medicare Advantage, each have different benefit structures, but all cover hospitalization the same way - there is a co-payment by the patient and all services provided during the stay are covered. There are no separate bills for doctors and tests and there is a limit on what the patient pays. Some plans have hospitalization co-pays of $200 per day. Others have "per stay" co-payment of $500.

As an insurance agent, I tell seniors that their best coverage is to stay with Medicare and get a Medicare Supplement (plan F). If this man had a Medicare Supplement he would have had no co-payments. However, on an income of $1100 per month, he might have felt he could not afford to spend $120 per month (the AARP Plan F Med Supp price in Arizona) plus another $35 per month for a Part D drug plan.

This man would be a good candidate for a Medicare Advantage plan which would have limited his co-payment to somewhere between $500 and $1,000, depending on his plan. And his monthly premium for such a plan would be $0.

I go back and forth on my view of Medicare Advantage plans because I have concerns about Medicare paying out billions of dollars each year to private insurance companies. These companies take a big chunk of this money for marketing and commissions (to agents like me) along with sizable profits for themselves (plus multimillion dollar salaries for their CEOs).

But when I hear from people like this man, I see Medicare Advantage more positively. And I wonder if Democrats, in their desire to stop the "privatization of Medicare", are not throwing out the baby with the bathwater. And I wonder what seniors' reactions will be when the see their Medicare Advantage co-payments rise and benefits reduced. In states like California, Arizona, and Florida, where over 30% of seniors are on Medicare Advantage plans, there could be some serious backlash.