Question: I know that you've been over this before, but it never concerned me very much. Now it does. I have just turned 65 and have entered the strange world of Medicare and the need for some sort of supplemental insurance coverage. The reason is because, as I understand it, Medicare has a lot of holes in it. So I'm reading all of this literature and am really baffled. Particularly by the health services that advertise that they offer most or all of the supplemental coverage that the other companies do, but without the customary monthly or quarterly charge that the others require. This doesn't make sense to me, but I've lost the last column you wrote where you explained it.--T.R.
Answer: Well, you can't save everything indefinitely, so we'll run through it again. Sure enough, now that you've entered the senior citizen ranks, Medicare has become a very important part of your life, and you're quite right--Medicare, by itself, doesn't really cut it.
First, of course, you recognize the fact that there are two parts to the Medicare program. There's the basic Part A, "Medicare Hospital Insurance," which is yours simply by virtue of having been covered by Social Security.
The other branch of this is Part B, "Medical Coverage," which concerns itself with doctors' charges, both in the office and in the hospital, and with all of those other expenses associated with the hospital, over and above the room, surgery, X-rays, laboratory charges and on and on. For this you have $15.50 a month deducted from your Social Security check.
Neither A nor B--individually or in tandem--is enough. Under Part A (hospital), for instance, you're nicked $492 right off the bat for admission and your first 60 days and then, for the next 30 days, $123 a day. For a really serious, prolonged stay in the hospital the ante goes up to $246 a day for the next 60 days.
Part B has its own gaps. First, there's $75 deductible per year, but the real biggie in Part B is that it pays 80% of all "reasonable fees and charges," and there are frequently (if not invariably) big differences between what the medical community considers "reasonable" and what Uncle Sam considers "reasonable."
For instance: Your doctor prescribes and performs a procedure for which he bills you $200. Medicare, however, considers $150 to be the "reasonable" fee for the same procedure. Thus, Medicare pays $120 of the doctor's charge, which leaves you stuck with the balance of $80 instead of the $40 that you would have had to pay if the full $200 had been allowable.
These cracks in the Medicare program have always made some sort of additional, crack-filling insurance almost essential, but it has also opened the doors to a lot of fly-by-nighters, high-pressure insurance salesmen and just plain quacks preying on the natural fears of older citizens that--Medicare or no Medicare--they could get wiped out by a really serious illness or accident.
In Congressional hearings on the subject a few years ago, one 70-year-old lady testified that she had been sold no fewer than 17 separate "supplemental" insurance policies--virtually all of them overlapping and canceling out each other.
Of the many dozens of firms crowding the field, most are, fortunately, quite legitimate, although there are naturally wide variances in their charges and coverages. And trying to compare them--with all of their little, tiny type and their legalese--is, for the average senior citizen, a little bit like trying to compare a dozen unbroken eggs for freshness--difficult bordering on impossible.
Helping considerably here, however, is the annual study of the subject compiled by 75-year-old Jules Klowden, a retired Mutual of New York insurance man, for Senior World of California, the El Cajon-based monthly publication aimed at the 55-plus market.
This year's study encompasses 41 Medicare-supplement plans and covers eight categories falling under Medicare Part A and five under Part B.
Reprints of the 1986 "Comparison Guide to Medicare Supplement Insurance and Health Maintenance Organizations" are available for $2 each from Senior World Reprints, P.O. Box 1565, El Cajon, Calif. 92022.
Included in the comparisons: premium or subscription charges, registration fees, policies on pre-existing conditions, deductibles (if any) on hospital entry for the first 60 days, co-payment policies on the next 30 days, co-payment policies on the next 60 days, maximum periods of coverage for any one benefit, policies on skilled-nursing facilities, deductibles (if any) for blanket medical care, policies on outpatient care (for such things as X-rays, lab fees, radiation), policies on prescriptions, renewability of the contracts, travel restrictions out of the area and (where applicable) those portions of the state where the plan is available or, by omission, not available.
Of the 41 plans Klowden compares this year, 17 are HMOs (health maintenance organizations), and of those, six (up from three covered last year) are so-called risk-contract HMOs, which charge no premium and are the focal point of your inquiry.
The balance of them are conventional Medicare supplement insurance carriers--you go to your own doctor, your own hospital, Medicare picks up most of the cost, and the private carrier picks up most (or all) of the balance.
HMOs, on the other hand, operate quite differently, and, in the process, routinely provide many services not available through the conventional carriers.
These may include such things as complete physical checkups, eye refraction tests, eyeglasses, hearing tests, hearing aids, immunizations, prescription drugs, podiatry care, chiropractic services, heart pacemakers and even, in some cases, dental care. One studied by Klowden even goes so far as to provide custodial home care and free delivered meals.
The trade-off for belonging to an HMO is that you are opting for a sort of clinic-type medical plan--you go to a centralized facility, and you are either treated by a doctor chosen at random or one chosen by you from a list of participating doctors. You can, however, change doctors at any time if there's a matter of compatibility involved.
The risk-contract HMOs, to which you referred, go a bit further than the standard HMOs--you're pretty well "locked into" it, and changing to another type of coverage can get a bit involved because you have to make a written request for separation, and this can take anywhere from 30 to 45 days.
Now, how can some of these HMOs get away with charging you no premium for which other Medicare-supplemental carriers (and conventional HMOs too, for that matter) do charge?
This approach was dreamed up by Medicare about four years ago, Klowden said in a telephone interview, as a pilot program with selected HMOs around the country. The idea was predicated on the belief that preventive health care could keep Medicare's skyrocketing costs down by heading off a lot of serious illnesses on which it was losing its shirt.
And so Medicare struck a deal with these HMOs under which it would pay them, outright, 95% of the average monthly medical costs for Social Security recipients in their area multiplied by the number of enrollees that they succeed in signing up--regardless of the actual medical costs incurred by those enrollees.
Must Pay Standard Charge
Medicare recipients signing up with these risk-contract HMOs must still pay the standard $15.50-a-month, Part B charge (just as they must when they buy a conventional Medicare supplemental coverage policy too), and they must also live within 20 to 30 miles of one of the facilities maintained by their risk-contract HMOs.
But the trade-off is, indeed, an attractive one: no monthly or quarterly premium for the supplemental coverage.
"With Medicare costs and deductibles continuing to rise," Klowden said, "and with most of the private carriers going up in their premiums too, these risk-contract HMOs seem to be the wave of the future. Some of them in the East have gotten into trouble, because there was a big rush to sign up with them, and the people with the more serious health problems were, not unnaturally, the fastest to join them. But the thing seems to be leveling out, now."
By any other name, the risk-contract approach moves us closer and closer to--if you'll pardon the expression--"socialized medicine" as more and more Social Security recipients find themselves being priced out of the conventional Medicare-supplement market, and as the HMOs find that playing the averages and being assured of a predictable flow of funds from Medicare does, indeed, pay off.
Actual monthly medical costs--of which the risk carriers get 95% for every Medicare recipient they sign up--Klowden said, vary widely geographically.
"It can be as low as $50 a month in some parts of the country," he said, "and it can be as high as $400 in other parts. But neither the risk-contract HMOs or the other HMOs, for that matter, are for everyone. There are always going to be a lot of people who will insist on their own doctor and their own hospital, regardless of the cost."
And the HMOs, with their centralized, sometimes impersonal, approach to health care--and their general restrictions on emergency-only treatment for enrollees who are traveling--are simply too institutional for many Medicare members.
Still and all, there's nothing to suggest that the quality of care provided by HMOs isn't every bit as good as that available through conventional health providers.
Don G. Campbell cannot answer mail personally but will respond in this column to consumer questions of general interest. Write to Consumer VIEWS, You section, The Times, Times Mirror Square, Los Angeles 90053.