Inequities for poor, minorities in Medicare's private health plans, report says

Low-income people enrolled in Medicare private fee-for-service plans pay more for their health care in some counties than people enrolled in the same plans in neighboring, more affluent counties, according to a new Medicare Rights Center report. "Certain members of Congress and the insurance industry lobby have been working overtime to sell the argument that overpaying insurers is in the best interest of poor and minority Americans. But it is a misleading, untruthful strategy to keep the overpayments to Medicare private health plans flowing," says Robert M. Hayes, president of the Medicare Rights Center, a national consumer service organization. "Our county-to-county analysis found that there is no correlation between excessive federal subsidies and lower health care costs or richer benefits in minority and low-income communities," said Hayes. In Medicare Private Health Plans vs. Medicare Savings Programs, the Medicare Rights Center cites examples where Medicare private fee-for-service plans in affluent counties receive greater federal subsidies per enrollee than those in nearby poorer counties where more minorities reside. The consumer group also found that the out-of-pocket costs are greater for people enrolled in plans in the poorer communities, belying assertions by the Administration that excess payments to private insurers are the best route to improve health coverage for poor people with Medicare. The Medicare Rights Center report compares Medicare private fee-for-service plan premiums and benefit packages for eight counties in four states with income, race and ethnicity data from the US Census Bureau. The report indicates how much the federal subsidies to private health plans in each of these counties exceed health care costs under Original Medicare. In Clermont County, a relatively affluent county in Ohio, there is no monthly premium for one private health plan yet the monthly premium is $69 for the same plan in a neighboring county with almost double the proportion of families living in poverty and a high percentage of African American residents. An analysis of health plans in Utah found that one plan charges no monthly premium in a relatively affluent county, but in a poorer county, the plan members pay 27 percent more for an average six-day hospital stay than plan members in the affluent county. "The best way for Congress to lower health costs for low-income Americans with Medicare is to improve access to the federal and state programs, the Medicare Savings Programs, that directly lower consumer costs," said Hayes. "By aligning the income and asset criteria for these programs with that of the Medicare drug benefit subsidy, more people in more places would get the help that these programs were intended to provide to the poor." The Medicare Savings Programs, targeted to low-income people with Medicare, help pay the Medicare monthly Part B premium, deductibles and coinsurance. Currently, the income criterion for enrollment in Medicare Savings Programs is 135 percent of the federal poverty level but it is 150 percent of the federal poverty level for "Extra Help," the federal subsidy for the Medicare drug benefit available through private plans. Asset limits are $4,000 for individuals and $6,000 for couples for Medicare Savings Programs but more generous for Extra Help at $11,207 for individuals and $23,410 for couples. The Medicare Savings Program known as the Qualified Medicare Beneficiary Program (QMB) covers all cost sharing for medical services but there is no private health plan that covers all costs. As Congress debates whether to cut overpayments to Medicare private health plans, the insurance industry lobby and some members of Congress justify them by claiming overpayments help lower the out-of-pocket costs for minorities and low-income people with Medicare. The federal government pays insurance companies an average of 12 percent more for each insured member -- 19 percent more for people in private-fee-for service plans"than what it would cost Original Medicare to cover these same individuals. The Medicare Rights Center's report Medicare Private Health Plans vs. Medicare Savings Programs is available at http://www.medicarerights.org/MA_vs_MSP.pdf.