Medicare’s Alphabet Soup: A Primer

writes Lawrence Huntoon, MD, PhD:

Medicare is not mandatory for any “beneficiary,” but there are penalties that make the voluntary choice to opt out of Medicare as a “beneficiary” very painful.

Part A is paid for primarily by payroll taxes and is strictly a wealth transfer scheme (current Medicare beneficiaries who are not working pay nothing for Part A). If a “beneficiary” opts out of Part A, then that beneficiary forfeits all Social Security benefits (no SS checks).

Part B is paid about 75% by general tax revenue and about 25% from premiums paid by beneficiaries. A beneficiary can opt out of Part B without forfeiting SS benefits, but if the beneficiary decides later to opt back in to Part B, there is a significant penalty to be paid via increased premiums for every year the beneficiary did not pay into Part B.

Part C is Medicare Advantage (e.g. Medicare managed care). Beneficiaries transfer their Medicare payments to the managed care plan, which pays for low cost services not offered by traditional Medicare, but rations care for more expensive services. The rationing and denial of care for more expensive services is how these Medicare managed care plans are able to offer additional services not paid for by traditional Medicare.

Part D is Medicare drug coverage. For an additional premium, beneficiaries get drug coverage based on three tiers, with increasing co-pays as the tier increases. Recently, Medicare has been moving very common drugs, like potassium supplements, to the highest tier, which enhances the profit of those private companies that offer Part D coverage.

I don’t think Medicare Advantage is being phased out. However, there are plans under ObamaCare to cut payments to Medicare Advantage plans.

Medicare Advantage plans have been paid more than what would have been paid under traditional Medicare.

You have to understand the history of Medicare Advantage plans to understand why that is.

Congress did not want people to hold them accountable for rationing medical care, so they overpaid private insurers (Medicare HMOs) to do the rationing.

Medicare Advantage plans are preparing for this inevitable pay cut that is due to be implemented under ObamaCare – implementation of cuts currently delayed by one year, to get past the mid-term elections. One way they are preparing is they are limiting their panels of physicians, kicking some of the ones who treat sicker patients and thus incur higher costs, off of their panels. They are also implementing more restrictive treatment protocols.

L.R. Huntoon, M.D., Ph.D., F.A.A.N.
Editor-in-Chief
Journal of American Physicians and Surgeons
Editor@jpands.org
Lake View, NY

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