New research highlights how tricky comparing Medicare plans can be, especially for older adults with low incomes. We dig into that data and follow one woman’s Medicare shopping struggles.
One minute last December Leslie Montgomery was a medieval warlord pillaging a nearby kingdom. The next she was a retiree drowning in a flood of confusing Medicare sales calls.
The 75-year-old had been deeply immersed in her favorite free online game when a banner ad appeared warning her that she might be missing out on money from the federal government. She clicked, and within minutes, she received an avalanche of calls with health insurance quotes she had never requested.
A batch of federal regulations issued this year aim to protect consumers like Montgomery. Following a sharp rise in complaints of misleading marketing of private Medicare plans and a damning report by Senate Democrats, the Biden administration finalized new rules to rein in deceptive Medicare marketing tactics. The reforms face their first big test when Medicare’s open enrollment period kicks off on Oct. 15.
It’s easy to see why Montgomery is tempted by these kinds of online ads.
She’s one of about 12 million people in the U.S. whose medical and social vulnerabilities qualify them for both Medicare and Medicaid.
Earlier this year, she was diagnosed with Parkinson’s disease, and not long after was evicted from her home in an R.V. park for seniors. The Phoenix, Arizona resident now lives on just $50 a month of disposable income. So, she clicks.
As insurance brokers peppered her phone last December, Montgomery repeatedly explained that she was interested in the offer of extra cash from the federal government, not in switching plans.
“And they say, ‘Well, you have to have the right insurance policy to get it,’ ” she recalls. As soon as she hears that she hangs up — she doesn’t want a new health plan.
“It’s extremely frustrating to figure that somebody is there to help you and then you find out they’re not there to help you,” Montgomery said. “They’re basically there to shaft you.”
Too many options, too little information and an alarming level of deception
Open enrollment — which runs until Dec. 7 this year — is an annual chance for the country’s 65 million Medicare beneficiaries to shop for higher quality, lower cost insurance coverage.
“It’s a potentially high stakes decision with really important implications for beneficiaries’ health and finances,” said Gretchen Jacobson, a vice president at the Commonwealth Fund, a private foundation that also conducts health policy research.
Research shows that picking a flawed plan can waste seniors’ often limited income, and even lead people to get lower quality care or leave lifesaving prescriptions unfilled. Some of the enrollment choices people make can also be hard and expensive to undo down the road.
Yet, the Kaiser Family Foundation estimates that only about a third of people compare plans during this annual two month window.
Medicare shopping is tough.
In addition to the traditional Medicare coverage offered by the federal government, the average person can now choose from more than 60 other products, including Medicare plans run by private insurers (known as Medicare Advantage) and separate prescription drug coverage.
Every fall, millions of Medicare shoppers are bombarded by information about these dozens of options — and that information is often incomplete and in some cases fraudulent. Private insurers and brokers ran more than 640,000 commercials on TV alone last fall. Yet, two out of three seniors still say they would like to learn more about their options.
“It’s both too much information and too little information all at once,” said Brandon Wilson, a senior director at consumer advocacy group Community Catalyst.
Paid marketing skews heavily toward Medicare Advantage, which is more than twice as profitable for private insurers as any other type of coverage they offer. Nearly 9 out of 10 TV ads that ran last fall focused on Medicare Advantage, according to the Kaiser Family Foundation.
A new survey by the Commonwealth Fund also found that deceptive marketing tactics further muddy the waters. Three-quarters of respondents reported receiving unsolicited calls, which are federally prohibited. Half said they’d received information about a specific plan from the government, which does no such outreach.
“We were very surprised,” Jacobson, who led the research, said. “What was really concerning was that low-income people consistently reported these activities more frequently than higher-income people across almost every measure that we asked about.”
Nearly a third of people living on less than $25,000 a year reported that an ad had misled them. The same group was twice as likely as peers with higher incomes to say they’d felt pressured to switch coverage.
People with low incomes who are eligible for both Medicare and Medicaid have even more options in the form of special Medicare Advantage plans called Dual-Eligible Special Needs Plans. These offerings often include extra benefits, but can increase confusion. This year the situation is even trickier as many pandemic-era protections that kept people enrolled in Medicaid are ending.
New regulations target deceptive ads, but still leave seniors without the help they want
Insurance brokers and agents are a top source of advice as older adults attempt to navigate this enrollment maze, but the information they offer is incomplete.
Private insurers pay these third party intermediaries commissions that can range from $50 to $762 per sign-up and other unreported payments to push certain plans. Brokers and agents are not legally required to present clients with all available options in their area.
“Their compensation is not always aligned with how they would like to advise beneficiaries,” Jacobson said, pointing to findings from focus groups conducted with insurance brokers.
That disconnect is especially true for lower income clients, Jacobson noted. Advising potential clients to stick with traditional Medicare generates little to no money for the broker — unless the person purchases private insurance to supplement their government coverage.
“So when a low-income person talks with a broker, for the most part, the only avenue for that broker to make money is to enroll that person in a Medicare Advantage plan,” Jacobson said.
That means, just like with advertisers, people cannot assume brokers are painting a full, unvarnished picture of their coverage options. The details of Medicare Advantage plans are especially important for consumers to understand since they can restrict people’s access to certain doctors and drugs more than traditional Medicare coverage does.
“This research highlights the need to make more trusted, neutral resources available,” said Brandon Wilson of Community Catalyst referring to the new Commonwealth survey.
Leslie Montgomery was able to turn to one of those resources — a helpline run by the nonprofit Medicare Rights Center — earlier this year.
Another alluring ad had caught her eye — this time on a postcard in her stack of mail, and she wanted to run it by an expert.
A trained helpline volunteer helped Montgomery weigh the new plan’s shiny offer of $100 per month to spend on vitamins, aspirin and other over-the-counter items against the benefits of her current coverage. She realized she was better off staying put.
The Medicare Rights Center says its call volume spikes by about a third around open enrollment. Still, people are far more likely to make enrollment decisions alone or turn to brokers than to use unbiased helplines or the federal government’s plan comparison tool.
Recent regulatory changes by the Biden administration aim to elevate the overall quality and transparency of promotional materials.
New restrictions limit how the Medicare logo and name can be used. The federal government has also cracked down on misleading promises of cost savings and on the use of superlatives like “best” or “most.”
Despite these efforts, many people on Medicare remain confused by what constitutes fraud and 90% of seniors in the Commonwealth survey report they do not know how to file a federal complaint about Medicare marketing.
Medicare experts and advocates often argue more federal funding should go toward State Health Insurance Assistance Programs, which received $55 million this year — less than a dollar per Medicare beneficiary — to provide free, local one-on-one counseling. They have also called for more reforms to broker compensation, such as requiring reporting of bonus payments or making sales commissions equal across all plan types.
Leslie Montgomery still believes in the importance of open enrollment as a chance for seniors to stretch their often limited dollars.
She also knows how treacherous a time it can be.
“I do my research on things, but somebody who doesn’t do that can really get themselves into a lot of bad trouble,” Montgomery said.
Tradeoffs‘ coverage of complex care is supported, in part, by Arnold Ventures.
Episode Transcript and Resources
Episode Transcript
Note: This transcript has been created with a combination of machine ears and human eyes. There may be small differences between this document and the audio version, which is one of many reasons we encourage you to listen to the episode!
Dan Gorenstein: Fall is in full swing. You might hear those crisp leaves crunching, that Sunday afternoon football blaring, and if you’re one of the 65 million people on Medicare, a whole lot of this.
[Montage of Medicare ads]
DG: More than 150 companies and brokers hawking their Medicare wares, hustling through a narrow eight-week window to convince as many people as possible to switch insurance plans.
Gretchen Jacobson: So the way for them to break through all those competitors and get people to choose their plan is advertising.
DG: Phones ringing off the hook, emails, text messages, more than 600,000 TV ads.
[Montage of Medicare ads]
DG: Today, how misleading marketing, too many choices and too little help combine to create a Medicare nightmare. From the studio at the Leonard Davis Institute at the University of Pennsylvania, I’m Dan Gorenstein. This is Tradeoffs.
***
DG: Leslie Montgomery has had a really rough year.
Leslie Montgomery: In January, my hands started shaking really bad, and I became kind of dizzy, so I ended up calling 911.
DG: Doctors eventually diagnosed the 75-year-old with Parkinson’s. She shuttled between the hospital and rehab. And in that time, her life fell apart.
LM: While I was in the hospital and the rehab in January, they evicted me from my house.
DG: The RV park for seniors banned Leslie from the property before she could rescue most of her stuff.
LM: I arrived in this home with two pairs of sweatpants and a blouse and that was it.
DG: The senior care facility where Leslie now lives in Phoenix, Arizona is mostly paid for by the state. The rest comes out of her social security check. Once she pays her life insurance bill Leslie says she’s left with $50 a month.
LM: My clothes, my toothpaste, any personal items, I’m going to have to be able to buy out of that 50 dollars.
DG: Open enrollment is an especially treacherous time of year for the 12 million people like Leslie — people with incomes so low they qualify for both Medicare and Medicaid. Nearly half live alone or in an institution. More than a third never finished high school.
New research shows people like Leslie are more likely to be victims of the most deceptive Medicare marketing practices.
LM: Don’t miss out on your $900 a month stipend from the government, you know, hit now if you haven’t done it.
DG: Leslie’s tapped the ‘now’ button. See, she’s an avid gamer…
LM: You’re a warlord.
[Computer game music]
DG: Loves to play Vikings: War of Clans on her phone.
LM: You have to do battles with other people and you’re battling other countries…
DG: And within minutes of clicking on one of these ads Leslie says the insurance brokers start waging their own kind of battle.
[Phone ringing]
LM: They just say that you signed up to request quotes from us, and I tell them, “I didn’t sign up for quotes. I signed up to find out about the money,” and they says, “Well, you have to have the right insurance and the right policy to get it.”
DG: It’s a sleight of hand that pisses Leslie off.
LM: It’s extremely frustrating to figure that, you know, that somebody is there to help you and then you find out, no, they’re not there to help you. They’re basically there to shaft you.
DG: Leslie hangs up as soon as brokers start pitching other plans. She actually likes the coverage she has. She’s one of about 30 million people with Medicare Advantage, the version of Medicare run by private insurance companies.
LM: UnitedHealthcare stood behind me every time I’ve gone into the hospital or rehab. They’ve been there for me.
DG: But research shows even people who like their coverage can often save money by shopping around — something only about a third of people with Medicare do each year. One big reason: Picking the right plan is really hard to do.
And that makes sense. The average person has more than 40 Medicare Advantage options, 20 prescription drug plans, 10 different kinds of supplemental coverage.
Lauren Lachs: How unfair that people are put in this position. I mean, on half of these calls I’m super confused and I have now gotten 50 hours of training.
DG: Lauren Lachs is a volunteer with the helpline run by the Medicare Rights Center, a nonprofit patient advocacy organization.
As you might guess, their calls spike this time of year. Lots come from low-income folks like Leslie, who reached out after she recently spied another potential deal.
LM: The postcard told me that I would get a hundred dollars a month to spend on over the counter items.
DG: Bandaids, ointments…
LM: Bed pads, aspirin, vitamins…
DG: Lauren says these sorts of perks that Medicare Advantage plans offer — debit cards, grocery money, what she calls “sweeteners” — reel in a lot of her callers.
Her job: Help people like Leslie see the fine print that’s not on the postcards. Are their doctors covered? Can they afford their drugs? Will their out of pocket costs explode?
LL: And so I, on the phone with her, went to Medicare.gov, typed in the details of her current plan.
DG: Pulled it up side by side with the plan from the postcard.
LL: And it was pretty startling.
DG: The new plan would have put Leslie on the hook for more than $8,000 a year in out of pocket costs — three times more than the plan she has now.
LL: Almost every piece of the plan when you looked at it side by side felt like her current plan was more robust.
DG: Even if Leslie had switched plans, her other insurance from Medicaid would have protected her from financial fallout. But Leslie knows a bad choice can stick a lot of people with unexpected bills [and] even harm their health.
LM: It’s like almost a bait and switch. I mean, I do my research on things. Somebody that doesn’t do that can really get themselves into a lot of bad trouble.
DG: Lauren Lachs worries too. She knows she only hears from a sliver of the most proactive people out there — and even they are struggling.
LL: Everyone calling is trying to make sense of the system, right? It’s amazing to see people just, like, take on this behemoth of a system and are persistent with it. And it’s still really hard. It’s just overwhelming.
DG: After the break, alarming new research on the dark underbelly of all this Medicare marketing.
MIDROLL
DG: Welcome back. Federal data show the number of complaints about misleading Medicare marketing more than doubled between 2020 and 2021.
Now, new research underscores just how widespread these struggles are and how misleading ads and a lack of unbiased help combine to make Medicare enrollment even tougher for consumers, especially those with low incomes.
I spoke with Gretchen Jacobson, the author of this new report and a vice president at the Commonwealth Fund, about their findings.
Alright, Gretchen, so I think we’re pretty clear by now in our story what the stakes of picking a Medicare plan are for seniors. So I want to start with what I’m guessing a lot of people are wondering.
Why are so many insurance companies and brokers trying so hard to reach the people picking these plans? Like, why spend all this money on marketing on a government insurance program? That’s sort of weird, right?
Gretchen Jacobson: So there’s a few things going on here. First, there’s a lot of money at stake.
So Medicare Advantage plans will receive about $450 billion in 2023 from the federal government.
DG: You said $400, sorry, $450 billion?
GJ: Right, and then their margins are projected to be about 4.6%. So when you do the math, that’s about $21 billion in profit from a federal program. That’s a lot of money.
GJ: And over 180 companies are offering Medicare Advantage plans now. So the way for them to break through all those competitors is advertising.
[Medicare ad montage]
DG: So your team at the Commonwealth Fund, Gretchen, decided to take a closer look at the tactics these marketers use to reach folks. Tell us more about that.
GJ: So we did a survey among people ages 65 and older to find out what marketing they were receiving and how it was affecting their coverage decisions.
DG: And you surveyed, like, 2,000 people.
GJ: Yes, that’s correct.
DG: So, what did you all find?
GJ: We found that people were getting a lot of advertising, which was not a big surprise. But the extent of advertising was a surprise. And what was really concerning was that people we surveyed said marketers were using misleading tactics and providing false information.
DG: And Gretchen, real quick, what do these sort of deceptive tactics look like?
GJ: So some said they saw advertisements that led them to believe something about a plan that they later found out was not true. About half of people said that they received a call or email from Medicare promoting specific insurance plans, and this couldn’t have been from Medicare because that’s not something that the Medicare program does. And then three quarters of people said that they received an unsolicited call from a plan or plan representative. So these are activities that people are saying that are occurring that are absolutely not allowed under current law.
DG: And, like, when you and your team tabulated the results from the survey, what was your reaction to all this deception, Gretchen?
GJ: We were very surprised.
We actually expected the rates to be much lower and then had planned to follow up with a few people who had experienced these things. But instead, we saw relatively high numbers of people reporting these [things] that should never occur. What was really concerning and alarming was that low-income people consistently reported these activities more frequently than higher income people across almost every measure that we asked about.
DG: One potential reason for that disturbing finding, said Gretchen: Low-income people are eligible for special kinds of Medicare Advantage plans that can be far more lucrative than the typical coverage that companies sell.
GJ: Meaning that there’s even more potential profit to be made from these plans for people with low incomes so it makes sense that even more plans would be trying to reach them.
DG: And so this all sounds kind of sleazy, right? But these deceptive practices also sound like the kind of things we all get hit with in our inboxes and on our cell phones. How much harm, Gretchen, do you think is being done here?
GJ: Well, it’s a bit different than a different consumer product you might purchase because this is your health insurance coverage. This is something that is much higher stakes than, say, buying a new phone. [So] there’s a lot at stake for people with low incomes. They don’t have the savings and financial cushion, which means if their choice doesn’t work out for them, it’s a big problem.
About one-third of seniors with low income said that when they receive a marketing call, they are likely to stay on the line because they want more information about their coverage choices. They’re clearly getting a lot of information, but it’s not the information that they need or want.
DG: And let’s get into this point, Gretchen, about the help that people with Medicare — especially those with low incomes — want, because that’s what Leslie Montgomery from the top of our show wanted too. And she ended up calling the Medicare Rights Center, but the data show that’s pretty rare. People are much more likely to turn to insurance agents and brokers.
What do we know, Gretchen, about both the good and the bad of so many people relying on brokers?
GJ: Well, they are widely used and they’re very much part of many people’s coverage choices. The issue is that their compensation is not always equal across all the coverage options. So most brokers, when we did focus groups with them, said that they get paid more to enroll people in Medicare Advantage plans than Medigap plans with traditional Medicare.
DG: And just real quick here, Gretchen: A Medigap plan is basically extra coverage you can buy on top of traditional Medicare to lower your costs, protect you against really big bills.
JG: Yes, that’s correct.
D: But we also know a lot of low-income folks can’t afford to buy extra Medigap coverage. So that puts these brokers, who make a living off the sales commissions that insurance companies pay them, in even more of a bind. Is that right?
JG: That’s right. So when a low-income person talks with a broker, for the most part, the only avenue for that broker to make money is to enroll the person in a Medicare Advantage plan.
DG: Whether that plan is good for them or not.
JG: Yes. There’s really no compensation for talking with the person about the tradeoffs of remaining in traditional Medicare versus going into a Medicare Advantage plan.
DG: Gretchen added that not even the federal government knows how much brokers make.
Their commissions, which can run up to 700 bucks per new Medicare Advantage member, can also be topped off with bonuses and other payments that aren’t reported or regulated. Brokers are also not legally required to offer people all of the available plans in their area.
DG: So Gretchen, we know the feds are aware of these issues not just with brokers but also some of the unsavory marketing practices you’ve mentioned. Senate Democrats also put out a big report on these issues late last year. What’s Washington done since then?
GJ: So the Biden administration earlier this year strengthened several rules such as how the Medicare name can be used and the conditions under which people can be called or not called and restrictions on advertising plans in areas where the plan’s not available. These are all great things that should really help people. However, people in our survey also said that they didn’t know how to file a report to CMS about their concerns with misleading information.
DG: Right, not only is it hard to figure out how to report fraudulent activity, people might not even know fraudulent activity is occurring.
GJ: That’s right.
DG: Gretchen also added there’s a lot more that Congress and the administration could do here. At the top of her list: Send more federal funds to the state programs that give people free, unbiased one on one insurance counseling. Item 1b: Change how brokers get paid so they are rewarded the same amount no matter which type of plan they recommend — or at least make their current incentives a lot more transparent.
I guess the idea that I have heard from you several times now is people want help. People need help. And there are not that many resources. And so that’s part of why brokers are so popular. So the policy challenge moving forward is how do you rectify that. Is that right?
GJ: Yes. People have said in our surveys that they’re not getting the help that they need and they’re not getting the information that they need.
DG: And I gotta think, Gretchen, those aren’t just abstract findings that you see in your research. When open enrollment starts this time each year, do people just like start coming out of the woodwork asking you for advice?
GJ: Oh yes. I think that happens to everyone who knows about Medicare.
DG: Who’s coming? Like, is it your aunt? Is it the neighbor down the street? Like, who’s coming at you?
GJ: Oh, it’s typically relatives. It’s about six people every year that I help with their coverage choices.
DG: And I’m guessing you help them because you know better than anyone how scary this marketplace can be without someone like you around. Is that why you do this in the little free time that you have?
GJ: I care about these people and I want to make sure that whatever coverage they have is going to work for them and that they have someone who can really help them to sort through their options. I mean, the people are really important to me and so it’s really important to me make sure they can get the health care they really need and afford.
DG: Gretchen, thanks so much for taking the time to talk to us on Tradeoffs.
GJ: It’s been a real pleasure, Dan. Thank you for having me.
DG: Open enrollment begins October 15 and ends December 7. If you or a loved one need help reviewing your Medicare options, visit medicare.gov or go to shiphelp.org. That’s s-h-i-p help dot org.
I’m Dan Gorenstein. This is Tradeoffs.
Episode Resources
Selected Research and Reporting on Medicare Marketing and Enrollment:
- How Health Insurers and Brokers Are Marketing Medicare (Jeannie Fuglesten Biniek, et al; KFF; 9/20/2023)
- The Private Plan Pitch: Seniors’ Experiences with Medicare Marketing and Advertising (Gretchen Jacobson, et al; Commonwealth Fund; 9/12/2023)
- The Challenges of Choosing Medicare Coverage: Views from Insurance Brokers and Agents (Faith Leonard, et al; Commonwealth Fund; 2/28/2023)
- A Relatively Small Share of Medicare Beneficiaries Compared Plans During a Recent Open Enrollment Period (Nancy Ochieng, et al; KFF; 11/1/2022)
- Private Medicare Plans Misled Customers Into Signing Up, Senate Report Says (Reed Abelson and Margot Sanger-Katz, New York Times, 11/3/2022)
- Traditional Medicare or Medicare Advantage: How Older Americans Choose and Why (Faith Leonard, et al; Commonwealth Fund; 10/17/2022)
- The Costly, Confusing Medicare Choices Facing 62 Million Americans (Tradeoffs, 10/28/2021)
Episode Credits
Guests:
- Gretchen Jacobson, PhD, Vice President, Commonwealth Fund
- Lauren Lachs, Volunteer, Medicare Rights Center
- Leslie Montgomery, Medicare and Medicaid beneficiary
The Tradeoffs theme song was composed by Ty Citerman, with additional music this episode from Blue Dot Sessions and Epidemic Sound.
This episode was reported by Leslie Walker, edited by Dan Gorenstein, and mixed by Andrew Parrella and Cedric Wilson.
Additional thanks to: Mitchell Clark, Rachel Shuman, Hong Truong, the Tradeoffs Advisory Board and our stellar staff!
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