Medicare Marketing Blitz Takes Aim at Seniors
Posted by medconsumers on October 1, 2005
Seniors are already getting an avalanche of mail and telephone solicitations as the insurance industry’s marketing of Medicare’s new prescription drug plan (known as Part D) officially takes off this month.
The Associated Press reports that the large insurers approved by Medicare to offer prescription drug insurance (Aetna and United Health among others) are each planning to spend between $30 and $80 million on marketing campaigns. At stake is an estimated $10 billion dollars in additional revenues which Wall Street has characterized as “an earnings bonanza.” I would call it “insurance industry pork.”
Medicare recipients will continue to be on the receiving end of this marketing blitz throughout the Part D enrollment period, which begins November 15, 2005 and ends in May 2006. Seniors should also be prepared for some insurers to promote their Medicare Advantage plans as a better choice than signing up only for stand-alone drug coverage.
These plans are a “managed choice” alternative to traditional Medicare and include hospital and physician coverage as well as drugs, but they limit the choice of doctors and other providers. The “bait” for switching to Advantage is that, at least during the initial enrollment period, the plans will pick up some or all of the Part D out of pocket cost of premiums and deductibles. These could easily add up to thousands of dollars for seniors who chose to remain in traditional Medicare.
The government has offered billions of dollars in subsidies to encourage insurers to offer Advantage plans. These subsidies make selling Advantage plans a much more profitable business for insurers than selling only the stand-alone drug coverage – at least over the short term. But when the subsidies end after a few years, the plans are likely to become unprofitable as the growing ranks of aging and sicker seniors run up larger medical bills. Insurers, having reaped billions in Medicare subsidies, are then free to bail out of the market, as they have in the recent past.
Unfortunately people are not being given trustworthy information to guide them in making important coverage decisions about the new plans. One would hope that Medicare itself could be counted on to provide accurate guidance. However, there are conflicts of interest that suggest otherwise. The new plans are the “first strike” in the administration’s efforts to privatize Medicare. And Medicare spent millions on a slick, but inaccurate, advertising campaign to sell the new plans to the public, according to the U.S. General Accountability Office (GAO). This suggests that the administration knowingly put politics ahead of the welfare of those on Medicare.
To help beneficiaries sort through a bewildering number of choices, Medicare is touting a help tool on its web site (www.medicare.gov/medicarereform/drugbenefit.asp). Seniors can supposedly enter the drugs they use to help select an appropriate plan. However, as of press time, it was not possible to do so. Because every plan will have a different list of covered drugs, people need to check to make sure that a plan covers the drugs they take. But be warned that plans can change the drugs they cover at any time. People without Internet access are told to call 1 800 MEDICARE. However, callers should keep in mind that a December 2004 report by the GAO found that hotline staff provided either inaccurate answers or no answers to four out of ten callers.
Many seniors are members of the AARP, which offers guidance at http://www.aarp.org/health/medicare (click on “Guide to the New Medicare Prescription Drug Coverage”). Members should be aware of AARP’s own conflicts of interest. The organization very publically lobbied for passage of the administration’s plan; and it receives over $100 million in annual royalties from sales of health insurance to its members.
The best advice may be to resist the inevitable appeals by marketers to make an immediate decision. Marketers may use the threat of higher premiums to push seniors to enroll on the spot. But in fact there is no penalty until after enrollment ends in May 2006. Hopefully, before then there will be more trustworthy information available. And if some in Congress get their way, enrollment may be extended and “independent” counselors available to help people navigate the new benefits.
Arthur A. Levin, MPH, Center for Medical Consumers ©