Medigap F Policy Phase-Out–What We Should Do About It

Medigap F Policy Phase-Out

Like many Medicare beneficiaries without supplemental health insurance through a former employer or the government, my mom relies on a Medigap policy to pay for the out-of-pocket expenses that Medicare does not cover.   After January 1,  2020, the Medigap policies that pay the $183 (in 2017) Medicare Part B deductible will not be available to new Medicare beneficiaries needing supplemental health insurance.  While my mom will be able to buy her Medigap F policy (one of the Medigap policies affected) after 2020 since she will be “grandfathered”, the Medigap F policy phase-out will affect the price of her premiums and the affordable Medigap coverage choices she will be able to find.

Medigap F policy phase-out sucking money from policyholders

Residing in the rarefied world of lobbyist-corrupted Washington, our Congressmen have no problem convincing themselves that my 80+ year old mom overuses medical care because she doesn’t pay an extra $183 per year for her primary care doctor’s visits!  This is the justification used for the Medigap F policy phase out. My mom IS already paying for the Part B deductible in the form of inflated Medigap and Medicare Part B premiums!   I am speechless and am finding it hard to convey the seething contempt I feel for this line of reasoning and those that put it into an action that attacks our most vulnerable Americans.  To many Medicare beneficiaries, $183 is a lot of money and some may postpone medical attention until it results in more serious and costlier medical conditions.

In all industrial nations but ours, primary care doctor visits serve as the bedrock for improved health outcomes and are encouraged.  This Medigap policy phase out discourages primary care doctor visits.  Unfortunately the “best” health care for our seniors plays second fiddle to making sure healthcare businesses continue to rake in income and profits that are already double those found in all other industrial countries.

This Medigap policyholder-unfriendly piece of legislation was part of the annual 17 year “doc fix”,  a give-back to medical doctors costing taxpayers an estimated $175 billion over 10 years with Medicare beneficiaries paying at least $58 billion of it in higher Part B premiums.  The annual “doc fix” told doctors that even though they charged too much for Medicare services, keeping them happy was more important than the nation’s need for affordable health care.   As usual, Congress has chosen to take money away from the individual American while giving money to the healthcare businesses it favors.  If Congress thought it had to give money to one group (doctors) in HICUP (BB Brigade acronym for those who are engaged in the business of health care in the USA),  then why didn’t it choose to take money away from another group in HICUP to fund it.  I can think of many places to reduce big spending in Medicare (e.g., allowing Medicare to negotiate drug prices with pharmaceutical companies, tightening up reimbursements to Medicare Advantage plans) that do not single out individual Medicare and Medigap beneficiaries for increased costs.

BB’s Brigade Response To The Medigap F Policy Phase-Out

I am not going to give you advice on how to “adjust” to the Medigap F policy phase-out.  My response to the Medigap F policy phase-out falls in the “and beyond” category of activism.  Whatever “adjustment” Medicare beneficiaries choose (e.g., buy another Medigap policy, switch to a private Medicare Advantage plan, or simply stop seeking medical care even when you think you may need it), they will never recover what they had before the Medigap F policy phase-out.

My “and beyond” advice is for the Medigap policyholders to take control of Medigap insurance and run it as a cooperative for the mutual benefit of all its policyholders!

Let me briefly outline how this might work.

response to Medigap F policy phase-out

The insurance companies that offer Medigap policies do not make any decisions about coverage. If Medicare paid for it and you still owe a part of the bill, the Medigap policy will pay its contracted share–no questions asked.   In almost every case, this process is expedited electronically and needs little manpower.   Medigap insurers do not have contracts for networks of doctors or hospitals nor do they have to manage costs of healthcare services.

Medigap policies are very lucrative insurance products.  For essentially being a simple bookkeeping operation, Medigap insurers are allowed to keep MORE of the Medigap premium for internal company use than can insurers offering Medicare Advantage plans–35% versus 15%  (for Medigap policies the minimum medical loss ratio allowed is 65% and for Medicare Advantage it is 85%)!   Medigap policyholders are therefore paying a lot of extra money for advertising and insurance broker commissions—costs that can be eliminated if Medigap insurance was run like a cooperative for the benefit of its policyholders.  The cooperative’s administrative costs for running the Medigap cooperative would be less than 10% of the premium. The savings obtained in a Medigap cooperative setup can be applied to reductions in premiums or even to increased benefits like dental and vision insurance.

The concept of a Medigap cooperative gets even better.  Because policyholders benefit directly through reduced premiums and increased benefits, they will be INCENTIVIZED to reduce healthcare spending.  Patients will learn to question and demand that their doctors deliver cost-effective care rather than care that serves to maximize the income and profits of the healthcare provider.  Some of these questions are given below:

  • What is my diagnosis?
  • What are my treatment options and what are the benefits and side effects of each option?
  • If I need a test, what will the test tell me? How will my treatment differ if the test reveals something?
  • What will the medicine you are prescribing do and can I achieve the same results through non-prescription drug methods? What are the side effects associated with this medicine?
  • Why do I need surgery? Are there other less costly ways to treat my condition?
  • What is my prognosis if I don’t have the surgery?

The potential benefits from a Medigap cooperative are immense and I am ready for one!   I am tired of feeding the health insurance company machine with outsized profits and unnecessary fees.   I want to take charge of my Medigap costs AND benefit directly from the savings.  How about you?  Contact your elected representatives and tell them about the Medigap cooperative and its benefits to keeping healthcare costs down.  Join BB’s Healthcare Brigade to help in bringing Affordable Health Care and Beyond for ALL Americans.

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