Is There Too Much Choice in Medicare Insurance?

Today marks the end of another annual open enrollment season for Medicare. Open enrollment provides existing beneficiaries the chance to explore all available private Medicare insurance plans that will be offered in 2021. They can look at their existing plans and decide if changed circumstances – either in their health needs or what private insurers are offering – warrants changing to a new mix of coverage.

In theory, shopping for Medicare is a great idea. Insurers make many changes each year in their plan offerings. Many people would get better coverage and pay less for their plans next year if they did their homework.

In practice, shopping for Medicare has been a bust. Even basic Medicare is complicated. And it’s been overtaken in recent years by an explosion of private insurance plans that have flooded the market with so many plans that consumers are befuddled. A key part of Medicare for many consumers is Medigap supplemental coverage. These private plans are regulated at the state level, introducing yet another bewildering chamber into the Medicare maze that consumers must navigate.

The Centers for Medicare & Medicaid Services (CMS) has built an impressive suite of Internet tools to help people navigate open enrollment and make informed coverage choices. Millions of people, however, find the tools so complex and confusing that they do nothing each year, thereby renewing their existing coverage by default.

There is a government-supported program to provide free Medicare counseling called the State Health Insurance Information Program (SHIP). Staffed largely by volunteers, SHIP is chronically underfunded.

Counselors may have a great understanding of what Medicare covers and the basic features and costs of original Medicare – Part A for hospitals and nursing homes and Part B for physician, outpatient, and equipment expenses. But they’re seldom equipped to tackle the extensive and sophisticated terms of private Medicare insurance plans – Part D drug plans and the fast-changing world of Medicare Advantage plans.

Consumers are largely on their own here. They are bombarded every year with mailings and online inducements for these plans. Often, the plans with the most appealing ads win out, regardless of whether they are the best or even appropriate for a specific person's needs.

Readers regularly plea with me to put them out of their informational misery and choose their Medicare coverage plan! It doesn’t matter to them that I know little about them, their health condition, or their list of prescribed medications. I also don’t know much about their financial situation and ability to pay for private insurance plans. No matter! Just pick one!

The Affordable Care Act provides a partial answer to this problem by having four basic types of coverage defined by metal “tiers” – bronze, silver, gold, and platinum. Even this modest number of choices, along with dense tax-subsidy details, is too much for many people. So we trained navigators to help consumers.

Medicare is already way past metal tiers, and recent CMS rule changes have introduced yet more features to Medicare coverage, especially in Medicare Advantage plans.

There is a solution to this mess, of course. It’s called universal health care, and it replaces consumer choice with a standard health plan that provides high-quality health coverage to everyone. Think of it as the 21st century equivalent of Henry Ford’s Model T – a dependable yet inexpensive product that filled a basic need. You could get one in any color so long as it was black!

I’m not convinced this is the right path for the U.S. But it becomes very appealing every year during Medicare open enrollment.