This open enrollment period, watch out for unwelcome surprises of Medicare (Dis)Advantage

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This fall, countless Minnesota seniors will be reexamining their Medicare coverage options for 2025 during the open enrollment period, which runs from Oct. 15 to Dec. 7. I am far from Medicare eligibility age, but as a health economist, I frequently get asked by friends and family about what plan they should choose. After all, health insurance is complicated, and it’s very hard to find unbiased advice.

Usually, I respond to the question with a question of my own: What kind of a plan are you considering?

Often, the response is some sort of a Medicare Advantage plan, and every time, I am shocked at how little folks know about the risks associated with signing up for that program instead of Original Medicare. Seniors should know that while Medicare Advantage may sound enticing in the advertising that blankets the airwaves each fall, it’s better known as “Medicare Disadvantage” because it can expose you and your family to big risks.

First of all, what is Medicare Advantage? Its formal name is Medicare Part C, and it serves as a single-package replacement for Medicare parts A (hospital care); B (physician services); and D (prescription drugs). However, it’s deceptively named because it isn’t real Medicare.

Original Medicare (parts A and B) is operated by the federal government, while part C is essentially just heavily subsidized private insurance that companies are allowed to label Medicare. Part D is operated by private companies. Insurers often try to make Medicare Advantage plans seem like a sweet deal through lower premiums and extra benefits like hearing and dental not covered under Original Medicare, but as the saying goes, putting lipstick on a pig doesn’t change the fact that it’s still a pig.

Under Original Medicare, there is little question about what care will be covered, a fact doctors appreciate because it means less paperwork for them and more time to provide actual care. But because Medicare Advantage isn’t real Medicare, private insurers can play all sorts of games to boost their profits by delaying or denying care. Often, this is through what is called a prior authorization, or extra paperwork for your doctor, forcing them to extensively justify why you need the care they seek to give you. For you, this means that should a major issue or even an emergency arise, your insurer may turn around and surprise you by claiming the care your doctor says you need isn’t “medically necessary” and refuse to pay for it.

These issues are so drastic that five Minnesota health systems — HealthPartners/Park Nicollet, Essentia, Avera, North Memorial, and Sanford — have announced they will soon refuse to accept certain popular Medicare Advantage plans from big insurers like Aetna, UnitedHealthcare and Humana. This follows a wave of threats by health systems upset with Medicare Advantage insurers across the country in recent months, but Minnesota stands out because our health systems are now actually following through. Minnesota seniors who choose to join or remain on Medicare Advantage plans are therefore likely to face even more difficulties than seniors nationwide.

Medicare Advantage denials are becoming increasingly common. Just between 2022 and 2023, denials skyrocketed by 55.7%. They also tend to be quite arbitrary; the reviewer, who has never met the patient, may not even read the patient’s records but deny care anyway. Increasingly, denials aren’t even done by real people, let alone clinicians, and are being taken over by poorly-designed AI algorithms that are notoriously erroneous; 82% of denials that are appealed are overturned, showcasing the poor quality decision-making that goes into them. But just 11% of denials get appealed because many patients aren’t aware they can appeal or don’t want to undergo the burdensome process.

Delays and denials are more than just inconvenient. They can worsen illness and even kill. But, they are a great way for insurers to boost their profits. Obviously, we all hope to never have a health emergency, but should one occur, Medicare Advantage may well stand in the way of you getting the care you need.

Medicare Advantage is so heavily advertised because private insurers make lots of money on the program. Unfortunately, they often do so by gaming the system, siphoning off our tax dollars by exaggerating the health needs of covered patients to the tune of $88 billion to $140 billion annually. Most private health insurers in the program have been accused of fraud and are starting to face some accountability in the form of lawsuits and investigations to recoup overpayments, but there is little chance that all of the lost money will ever be recovered. Private insurers have been fighting accountability for years, exemplified by recently released court records that show how they pressured the Obama administration into killing proposed regulations in 2014 that sought to reduce overbilling. Unsurprisingly, these efforts continue to this day.

As a young person, this is what makes me especially upset. I’m happy to pay my taxes and contribute to the care of all the incredible seniors in my life, but watching that money disappear into the Medicare Advantage money-incinerating bonfire for no good reason is depressing, to say the least. It also endangers Medicare’s solvency and decreases the chance that it will be there for me when I eventually become eligible.

You’re likely asking yourself: This sounds awful, so how do I avoid this? The safest route to reliable health insurance coverage that will keep you protected in the face of whatever life may throw at you is Original Medicare. However, because the Original Medicare coverage package was designed all the way back in the 1960s when medical care was much simpler, you will likely need to bolster it with additional coverage, such as a Part D plan and/or Medigap policy. Supplemental plans are private insurance plans just like Medicare Advantage, but they are regulated through different mechanisms and entail somewhat less risk for patients.

Why is Original Medicare the safest option for all seniors and not just those who have significant medical needs?

Because Medicare Advantage premiums are generally cheaper than the alternatives, some wonder why not start on Medicare Advantage and then switch to traditional Medicare later on when health risks are higher. Theoretically, this may be possible for some. However, switching back to Original Medicare after starting out on Medicare Advantage is quite risky because supplemental policy insurers can take into account preexisting conditions, leaving you with much higher premiums or even a refusal to insure. Starting on Original Medicare plus supplemental insurance tends to cost a bit more per month in premiums than Medicare Advantage, but it is the only way to ensure you will have quality and affordable coverage later on in life when the risk of a significant health need is unavoidably greater. In the long run, it may even be cheaper, too. Do yourself a favor and stay away from Medicare Disadvantage.