December 20-26, 2006

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Medicare's Fine Print

'Free' health insurance advice may cost too much

By Patricia Lynn Henley

In late November and early December, three North Bay senior citizens with different healthcare needs called a toll-free number that promised "unbiased guidance" for "navigating Medicare." In due course, each of them received identical packets recommending the same insurance plan. Only the names on the cover letters differed; it was a mass-marketing mailing sent under the cloak of personalized, altruistic assistance.

This is just one aspect of the current health-insurance morass, in which consumers must ferret out for themselves whether the advice they're getting comes from a truly impartial source or a for-profit company. Multibillion dollar corporations have the resources to present the "facts" in a fashion that best serves their own bottom-line interests. Sometimes the origin of this information is labeled so that it's ambiguous at best or even downright deceptive.

With the ongoing trend shifting the burden for health-insurance choices and costs from employers and the government to individuals, all age groups need to be aware of what's going on. "Spin" is definitely a force in all aspects of society, including prescription drugs, healthcare and insurance.

In the name of reform, "original Medicare" has been joined by a myriad of rapidly evolving private options for seniors' prescription drugs and managed healthcare. With most premiums rising and coverage details changing on Jan. 1, recipients have until Dec. 31 to choose the plan that best meets their needs, but they are urged to submit their paperwork sooner, so they aren't stuck without ID cards or other proof of insurance for the first part of January.

A resident of Sonoma, Helen, 78, called Senior Educators' toll-free line in November asking if her current $70 monthly premium for Secure Horizons' supplemental Medicare program is best. The friendly young woman who answered the call said cheerfully that Helen (who, like the other seniors in this story, asked not to be identified) could get coverage with absolutely no monthly premium payment, and the young woman would be glad to send details about the best available plan.

A retired business manager, Helen always reads every document thoroughly before making a decision. That's how she caught the fact that the recommended Blue Cross Freedom Blue PPO has a $1,000 deductible, compared to the zero deductible of her current plan. She also realized that a number of her co-pay fees would be higher; for example, the cost of her physical therapy visits would jump from $30 to $90.

Helen's sticking with her current Medicare supplement plan. The "zero" premium payment doesn't sound as good to her now as it did when the young woman from Senior Educators was describing it on the telephone.

"I've had two surgeries on my shoulders and carpal tunnel this year," Helen explains. "I think I paid $150 for each time as an outpatient. That's only around $300--a lot less than $1,000."

The suggestion that Helen consider the Freedom Blue plan came from San Francisco-based Professional Senior Educators Insurance Services, which includes its full name at least once on its marketing materials but mostly refers to itself as the more helpful-sounding Senior Educators. When Sonoma County resident Sandy, 79, a retired real estate agent and former registered nurse, called for advice, the Senior Educators representative asked her to spell the name of her current insurance plan, Kaiser Permanente.

"I asked her why she wasn't familiar with Kaiser," Sandy recalls. "She told me she was in a small town in Minnesota."

Sandy could clearly hear several other voices in the background, all answering similar questions about Medicare insurance. Eventually, Sandy was mailed a cover letter, insurance pamphlets and application forms identical to those sent to Helen. Sandy also decided to stick with her current coverage.

Ditto for Janice, who called Senior Educators about her 88-year-old mother-in-law, currently covered under a Secure Horizons supplemental Medicare plan. Once Janice saw the deductible and other terms, she decided Senior Educators' recommendation wasn't right for her family.

All three callers reported that company's representatives urged them to register for Medicare plans through Senior Educators, saying "referral fees" from insurance companies are what make it possible to offer this "free service for seniors."

California companies aren't paid referral fees--only sales commissions, says Melinda Aval, chief investigator for the California Department of Insurance. Senior Educators is under scrutiny to see if its marketing efforts meet the state standards for honesty, good faith and fair dealing.

If a company's advertising is found to be inappropriate, the firm is asked to change its methods, Aval says. "Sometimes we just close [the investigation] out with a warning after they've made the correction," she explains.

Jeff Flick, Bay Area regional manager for the Centers for Medicare and Medicaid Services, says most infractions of federal insurance guidelines are reported by other companies, so the market polices itself.

The ultimate result, says Bonnie Burns, training and policy specialist for the nonprofit California Health Advocates, is regulation by disclosure. If a company explains its status, policies and limitations anywhere in its materials, then it's often considered legally compliant.

"If the disclosure gives you information about something and you don't see it or you don't understand it, there will be no consequences to the person who made the disclosure," Burns explains.

Seniors trying to choose the least expensive Medicare plan may not realize that there's a large deductible, or that some services or procedures might not count toward the maximum "cap" on how much the recipient pays each year. Seniors who are accustomed to fairly all-inclusive supplemental Medicare policies could switch to a different plan and discover the out-of-pocket expenses are a lot more than anticipated. And if their health suddenly takes a turn for the worse, they may find that many major costs aren't included.

"What's in the contract is what's important," Burns adds. "It's not what's in the advertising. Does the contract accurately reflect what the advertising is saying to people? There are just enormous opportunities for misunderstanding."

Companies like Senior Educators may in fact be giving good advice to seniors, Burns says, but there's no way to know how much the commission is for each senior registered or if that money influences the firm's recommendations.

"It's virtually impossible to make fully informed decisions," says Sonoma State University instructor Skip Robinson, one of the co-authors of the university's five-year healthcare crisis report. "They've made [Medicare] unnecessarily complicated, so you can't make good comparisons in most cases."

Many private Medicare plans are set up to appeal to healthy seniors who want low premiums and aren't concerned about the level of co-pays or covered services, Robinson says. That leaves the government-run program with a higher level of unhealthy seniors, which causes costs to rise. Fragmenting the market weakens the system.

The new Democratic congressional majority has pledged to revamp the unwieldy Medicare system, but it will take a strong bipartisan effort in the face of an even stronger corporate desire to protect and perhaps expand the existing profitable circumstances.

"They have absolutely fantastic profits at risk," Robinson says of the pharmaceutical and insurance industries. "They make so much profit in the United States, it's really shocking."

And with that much moolah in the mix, there's bound to be major lobbying and marketing efforts to convince both government officials and the public that the current trend toward free-market private health insurance plans is in everyone's best interests.

Robinson comments, "People are just unconscious of how much companies are trying to affect their reasoning."

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