The Costly, Confusing Medicare Choices Facing 62 Million Americans

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!

Medicare.gov Ad: An official message from Medicare. Did you try it yet? Comparing plans? 

Dan Gorenstein: 62 million older adults and people with disabilities should be online shopping right now.

Ad: I found lower premiums. And lower prescription costs.

DG: It’s open enrollment…the one window each year when every single person on Medicare can change their coverage.  

Ad: Comparing plans really pays! [Guitar]

DG: But research shows just 3 in 10 people shop around.

Tricia Neuman: It’s exhausting. It’s tedious. We listened to bad Muzak as we were put on hold.

DG: And even when they do, people often pick plans that hurt their wallets and potentially their health.

Today, why millions of Americans are stuck in a cycle making dangerously bad Medicare enrollment decisions…and what we could do about it.

From the studio at the Leonard Davis Institute at the University of Pennsylvania, I’m Dan Gorenstein, and this is Tradeoffs.

***

TN: Okay. Tell me which plan you’re in now.

Lilyan Grossman: It’s not the very cheapest one. It’s the next one up. 

TN: Does it have a name? 

LG: Yeah. You want me to tell you what it is? Come on, Trish know how old I am? 

DG: On the 18th floor of her downtown Philadelphia high-rise, Lilyan Grossman is finally getting around to doing what she’d put off for years.

Seeing if she can get a better deal than the $6,000-plus a year she’s paying for three kinds of Medicare coverage.

She’s called in a family friend via Zoom to help, and she’s agreed to let us sit in.

TN: Okay, it would be awesome to get all the medicines from your medicine cabinet you might need to refill over the course of a year. 

LG: Okay, then hang on a minute and I’ll get that stuff. 

DG: The 87-year-old with more salt than pepper in her hair eases out of her kitchen chair and heads towards her bedroom.

Sfx: Pill bottle noises

DG: Lil lines up her 6 medications as she sits back down.

TN: Okay, now we get to a slightly painful part where I’m going to be typing in each of your drugs…

DG: She squints from behind her red glasses, reading the labels one-by-one.

LG: Okay Carvedilol, C a R V E D I L O L. / TN: 12:25 What’s your dose level? / LG: Hydroclorothiazide. / TN: Hydro… / TN: 13:58 Do you take the generic of that? / LG: …chloro… / TN: …C-H-L-O-R… / TN: 14:55 How long does this inhaler last you? / LG: …O…T-H… / TN: Does it end with Z-I-D-E? / LG: Z-I-D-E, yeah.

DG: The family friend guiding Lil on the other end of the line through this tedious process is not just some nice lady. 

News montage: Joining us now is Tricia Newman of the Kaiser Family Foundation. // A highly regarded Medicare expert // The font of an enormous amount of important research and reports // Tricia Neuman //  A guest lecturer at Harvard’s Kennedy School … // Tricia Neuman.

DG: Tricia Neuman is one of the nation’s top Medicare minds. And to be honest, it’s kind of surprising someone like her paws through the medicine cabinets of her family and friends…spends hours on hold with health insurers.

But she’s helped people like Lil navigate Medicare’s enrollment maze about two dozen times now. She does this work because Tricia and her colleagues at the Kaiser Family Foundation know it can pay off.

TN: We just did a study and 70% of all people on Medicare did not compare their plans in a recent open enrollment period. There are a lot of people who are spending hundreds of dollars more than necessary because the process is just too challenging.

DG: Those hundreds of dollars can mean a lot to a senior on a fixed income deciding between seeing the doctor, going to the grocery store and living in a safe apartment. 

Unfortunately, Tricia says, millions of Americans are in suboptimal Medicare plans. But people often have no clue, because after they enroll for the first time, they rarely shop again. 

And the people least likely to shop are those who could benefit most…people with low incomes and less education and people of color.

One big reason: too many choices. 

TN: In Philadelphia, for example, people will have a choice of more than 50 Medicare advantage plans, more than 20 stand-alone drug plans. It’s almost imponderable how many options people have out there.

DG: Call it the Amazon-ification of the Medicare market…pages and pages of products with few clear ways to compare them.

Medicare looked a lot different 20 years ago.

Music

TN: Most people didn’t think about it because Medicare was relatively easy. They turned 65. They automatically went on Medicare. There wasn’t really this marketplace dynamic that we see today.

DG: That marketplace now includes a prescription drug benefit known as Part D and an alternative to traditional Medicare known as Medicare Advantage. 

Both options run by private insurers, who compete fiercely for seniors’ business. Their growth really began to soar, says Tricia, after 2003, when Congress passed the Medicare Modernization Act.

TN: And the idea was to give people more choice. But over time, things have gotten more complex. The theoretical value of all these choices is not matching up to the reality of what people actually do.

DG: That’s certainly played out for Lil. 

LG: If you sit down and start looking across those pages and trying to compare those plans, it makes you crazy. It really does.

DG: That’s why she called Tricia in the first place. She kinda assumed she wasn’t in the best plan, but just wasn’t sure.

LG: There’s so much information that it’s really, really hard to understand what it is you’re getting, what it is you’re paying for, how protected you are. And what’s the point of having all these plans in front of you when you have no idea what any of them cost comparatively? I mean, how do you evaluate that?

DG: Lil appreciated what Tricia was doing for her.

After dealing with Lil’s prescription drugs, Tricia asked Lil to call the insurance company that runs her Medigap plan. That’s the plan that covers the costs that Medicare doesn’t.

Last year, Lil paid more than $4,000 in premiums and Tricia thought they could save some serious money there.

Insurance Company: This call will be monitored and recorded for quality purposes. Please stay on the line.

Sfx: Hold music

DG: As the customer service team looked up Lil’s other options, we heard arguably some of the most ominous health care hold music around. 

When the sales rep came back, Tricia pounced. 

TN: Do you have Plan D as in dog?

Insurance Company: No, I got A as in alpha, B as in boy, C as in Charlie, F as in Frank, G as in goat, K as in kilo, L as in Lima, and N as in november.

DG: The sales rep volleyed back his own series of questions about Lil’s health history…

Insurance Company: Now within the past two years, did a medical professional tell you that you may need any of the following? Organ transplant. 

LG: No. 

Insurance Company: Okay, thank you. Back or spine surgery?

DG: Pre-existing conditions can still spike costs in this corner of the insurance market, making comparing plans even more complicated.

Insurance Company: …alright. Heart or vascular surgery? 

LG: No. 

DG: After an exhausting 50 minutes on the phone plus another 40 sorting through her prescriptions, Tricia had found Lil new plans that would save her about $2,000 next year…nearly a third of her total annual health insurance costs.  

But Lil wasn’t ready to pull the trigger, telling Tricia she needed the next few days to think about it. 

LG: Thanks a lot. 

TN: Bye, Lil. 

LG: Thanks a lot, sweetie.

Sfx: Lil sighing

DG: Lil was tired, frustrated and worried. $2,000 was a sizable chunk of money, but she was weighing it against something else she really valued that’s hard to put a price tag on.

LG: You know, you get to a stage in life where it’s just easier to stay where you are. I’ve got a system and it works, and I’m comfortable.

DG: A plan switch — even the most expertly researched one — comes with a lot of unknowns: new hoops to jump through, fine print you might have missed.

A lot of the 62 million people on Medicare share Lil’s fears, but research suggests staying put is riskier than it seems. Those consequences and whether Lil switches plans…after the break.

MIDROLL

DG: Welcome back.

We’re in the midst of open enrollment season — the one chance every year for the 62 million Americans on Medicare to shop for cheaper, better coverage.

Before the break, we heard from Medicare expert Tricia Neuman about how more and more private plans have entered this market giving people an unprecedented number of choices.

We wanted to know what the evidence shows: Do all those offerings make people more likely to find a plan that better suits their needs? Really, what are the costs and benefits of having so many options?

So we turned to this guy.

Amal Trivedi: Okay, so my name is Amal Trivedi. I am a professor of health services, policy and practice at Brown University.

DG: He’s also a doctor and…he’s a big fan of jam.

AT: Arguably the most famous study that’s been done that ever looked at this phenomenon of how sometimes more choices don’t lead to better decisions is a study of jams in a supermarket in Northern California. And the researchers were really clever. They put out either six jams in that supermarket or they went back and laid out 24 jams. And what they found surprisingly is that the supermarket sold a lot more jams when there were just six.

Beat

AT: Now that goes contrary to economic theory. Usually more choice is better. If there’s somebody out there who only wants rhubarb, then having 24 that includes the rhubarb would get you more customers. But they didn’t find that. They found that people are more likely to not choose a jam when there were 24 on the display counter.

DG: I feel obliged to ask: Is there really just rhubarb jam? I’ve never seen that in my life.

AT: The reason I thought of that is that this was a pretty upscale supermarket. So I figured this might be some sort of artisanal choice that might’ve been available. So yeah, no, I’m a straight up grape jam guy, but I was trying to envision the context. 

DG: Pretty ridiculous, Amal. 

So you’re saying one downside to all these choices is that people just walk away. We also know that even when folks do shop, they don’t usually do a great job.

There’s one study that found nearly three-quarters of the time, I think, seniors failed to pick the lowest cost prescription drug plan and spent 25% more than they needed to.

So, how big of a deal is leaving money on the table like that?

AT: Well, let’s first think through what is the typical financial situation for a senior? The median income is $27,000 a year. And a lot of seniors, they live on a fixed income, trading off between, you know, their out of pocket cost for health care, their heating bills and food bills. And sometimes, it’s really hard to figure out what types of services should you continue to pay the copays for and which ones you should cut down on.

DG: And do we actually have evidence about what kinds of care seniors cut back on when they are faced with these tough choices, Amal?

AT: There is a large literature on the impact of even modest copayments for seniors on the use of high value, effective health care services things like cancer screening, seeing primary care doctors to manage chronic conditions, taking medications that prevent cardiovascular disease…and the seniors who are more likely to cut back are those who are living in poverty and that can have downstream effects on health.

DG: So part of what you’re telling me is if seniors are facing some sort of financial squeeze because they’re picking a plan that’s more expensive than they need to, they have less money to purchase their prescriptions or go see their primary care provider…that could lead them to cutting back on care and could ultimately really compromise their health.

AT: That’s exactly right. So we actually did a study looking at what happens when seniors’ copays for doctor visits went up even slightly, and what we found is that seniors didn’t just cut back on the number of doctor visits. They were actually more likely to show up in the hospital. And what that means is that a skimping on even simple things like seeing your regular doctor can have serious health consequences.

DG: Amal, thank you so much for taking the time to talk to us on Tradeoffs. Really appreciate it.

AT: This was great. Thanks so much.

DG: The kind of evidence Amal is talking about helps us appreciate what’s at stake if people pick the wrong Medicare plan.

But changing plans can be scary.

That’s what had left Lil Grossman feeling torn when we last spoke to her.

So we called her back to see where she’d landed.

DG: Hi, thank you.

LG: Hi, how are you today?

DG: I’m doing okay, how are you?

LG: I’m okay, I’m okay.

Music

DG: So after all that terrible hold music, all the data entry and the help from Tricia, what did you decide?

LG: Well, after cogitating for a few days…I guess, you know, at this stage of life…it’s just, it’s like too much.

DG: Lil told us she actually came inches away from changing Medigap plans, but then things got complicated… 

LG: It turns out there’s a little kicker.

DG: The price that sales rep originally quoted Lil hadn’t properly accounted for a pre-existing lung condition she has.

And even though the insurer has covered Lil for years with this condition, and it’s never sent her to the hospital, switching plans would’ve meant a big bump to her premium. 

LG: So that was the end of that.

DG: The ordeal affirmed Lil’s fears, her lack of trust that this whole process is worth the hassle.

Tricia has offered to help Lil look again next year, but unless her costs explode, Lil said she plans to stay put. 

LG: After this experience, you know, it was like why don’t you just leave well enough alone? It’s not that horrible…you know what you got, they take care of you, that’s it.

DG: Tricia was disappointed, but not surprised.

TN: A lot of people just kind of tighten their belts and make do because they feel the juice isn’t worth the squeeze, and they just, you know, let it ride.

DG: But all that inertia takes a toll on the millions of people on Medicare who are in frail health and have tight finances.

The good news? 

Congressional hearing: …with regard to Medigap, the House Ways and Means…

DG: This is a problem Congress has tackled before, back in 1990.

Congressional hearing: …the language in most insurance policies is often ambiguous and difficult to understand.

DG: That’s when Congress stepped in to simplify the marketplace for Medigap, the supplemental insurance that Tricia recently helped Lil shop for.

TN: Consumer advocates had raised alarm bells about how confusing the marketplace was becoming, and then members of Congress kind of took it up and ran with it.

DG: Lawmakers forced private insurers — who, by that point, were offering hundreds of different Medigap packages — to whittle their wares down to just 10 standard options, generically labeled A through J.

So a Plan G from Aetna came with the same benefits as Plan G from UnitedHealthcare, and consumers could make apples-to-apples comparisons.

But that was the Medicare of 31 years ago. 

TN: Over time, things have gotten more complex with so many plans offered across the country so that individuals have not only a choice of Medicare HMOs and PPOs but also dozens of part D prescription drug plans.

DG: Tricia said lawmakers could dust off their Medigap reform playbook — try to shrink and standardize these new offerings — but that would likely face pushback from all those private insurers Congress invited to the party back in 2003 with that Medicare Modernization bill. 

Tricia says there is some merit to this argument. Insurers do offer a huge variety of benefits not included in traditional Medicare, like dental and vision coverage, even meal delivery. 

TN: There really are tradeoffs between giving plans flexibility to offer innovative benefits versus making the benefits more readily comparable. People do like choice and the benefit of choice is you can decide whether or not you want more generous or less generous coverage, you can sort of dial up or down with premiums. So there is some advantage to having multiple options. The question is how many do you really need?

DG: So far, advocacy groups have told us there seems to be little appetite in Congress for some 1990-style reform. But there are still steps Congress could take.

First, invest more money in navigation programs known as SHIPs. Those are programs that train volunteers to do essentially what Tricia does for her friends and family.

And second, limit how much financial damage one bad plan choice can do by capping out-of-pocket spending across Medicare.

Until there’s some action, Amal and Tricia worry for the physical and financial health of the millions of Americans who do shop for Medicare plans…and the millions who don’t.

I’m Dan Gorenstein and this is Tradeoffs.