Medicare coverage cut back

For Audrey McCann, having to spend a week in the hospital over the Christmas holidays was bad enough. But when the hospital informed the 74-year-old Santa Cruz County woman that her medical insurance would require her to pay $800 out of her own pocket, she was stunned. Doesn’t Medicare take care of hospital bills? she asked herself.

“When I got home, I realized I couldn’t pay the rent” because of the hospital charges, said McCann, a former schoolteacher.

Across California and the nation, seniors are receiving similar unwelcome surprises as they discover that their Medicare health maintenance organization benefits have grown skimpier and that they are being asked to foot a bigger share of their medical bills. The reason: Many HMOs that offer Medicare coverage are cutting back on the once-rich benefit packages that enticed millions of Americans to leave traditional Medicare and choose private health plans instead.

Medicare HMOs receive payments from the federal government to take care of Medicare recipients, but those payments are not keeping pace with the increasing costs of medical care, particularly hospital stays and prescription drugs. So they are raising premiums, charging co-payments for services that did not require them before, such as inpatient and outpatient care, and reducing benefits, particularly for prescription drugs.

This year, 83% of Medicare recipients nationwide who get their benefits from HMOs are being asked to make co-payments, sometimes large ones; only 4% paid any co-payments in 1999, according to a new report from the Commonwealth Fund, a New York-based philanthropic and research group.

“Seniors are totally shocked by the co-payments,” says Clare Smith, the director of Sacramento-based California Health Advocates, a health insurance counseling group for seniors.

Requiring Medicare recipients to share more of the cost illustrates a larger trend in health care. Younger people who get their coverage from employers are also facing greater cost-sharing burdens. But high co-payments and deductibles fall hardest on the elderly and can devastate the budgets of Medicare consumers, who have a median annual income of $14,300.

HMOs say they have little choice but to make seniors pay more. In 1997, Congress passed a law reducing the amount the federal government was willing to spend on Medicare, limiting HMO payment increases to about 2% each year. “It is very difficult to ask our members to pay more of the cost for their health care, but it is necessary,” says Meghan Dorton, a spokeswoman for Secure Horizons.

It’s important to heed these lessons of Medicare HMOs as the Bush administration and conservative think tanks push for Medicare reform. The current proposals would encourage even more seniors to turn to private insurers for Medicare benefits.

Under the Bush proposal, which could move through Congress this year, seniors would choose health coverage from several insurers offering both HMO and less-restrictive preferred provider organization, or PPO, plans. In return, they would get a prescription drug benefit, just as seniors did a decade ago when they flocked to HMOs to get help paying for their medications. People who stay in the traditional Medicare program would get a less comprehensive drug benefit, if any. And just as seniors are now painfully learning, the federal government can reduce the amount it is willing to put into the new program, leaving them to assume more of the cost of their care as time goes on.

“A lot of people recognize this proposal as a backdoor way to shift the costs of health care onto beneficiaries,” says Marilyn Moon, a health economist at the Urban Institute in Washington. Traditional Medicare has worked well, providing access to lifesaving technology that many could never afford. Reform that fundamentally changes Medicare ultimately will saddle seniors with greater costs, leading some to delay or avoid care altogether -- or, like McCann, to forgo money they need for life’s other necessities.

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Trudy Lieberman can be reached by e-mail at trudyal530@aol.com.