How Much Money Would Medicare Save, If ...

[aruzinsky]

How much money would Medicare save, if it contractually forbade insurance companies from advertising Medicare Advantage Plans?   All of those obnoxious TV commercials must cost a fortune. And they are completely unnecessary because all of the information that customers need is already available for free at

https://www.medicare.gov/plan-compare/#/

[GailL1]

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@aruzinsky wrote:

How much money would Medicare save, if it contractually forbade insurance companies from advertising Medicare Advantage Plans?   All of those obnoxious TV commercials must cost a fortune. And they are completely unnecessary because all of the information that customers need is already available for free at

https://www.medicare.gov/plan-compare/#/

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I think it is a good question -

Since Medicare Advantage plans are a different breed than the traditional Medicare fee-for-service, it is hard to determine how these advertising cost are covered (or absorbed) by the various insurance companies.  I am gonna guess that the massive TV commercials and the mail-outs are only done by the more larger of them (see graphic below).  Remember some areas of our country have NO Medicare Advantage plans available.    As payment for servicing these Medicare beneficiaries, they receive a capped per-enrollee payments from the federal government - this is based on an annual benchmark calculation.

Are these advertising cost included in this benchmark calculation - I don't know.

Medicare Advantage plans are profitable for most of the insurers so these cost might just be absorbed as competition (administrative cost) against the other insurers. 

OR , and most likely, they make it up in care management, of which they are good at doing.

Don't get me wrong, I am not knocking the premise of Medicare Advantage plans - many Medicare beneficiaries really like them for a variety of reasons.  And they evidently can provide care in a more proficient manner than the government ran conterpart.

The same question could be asked about the additional services which many of them are now providing which the traditional program does not.  Are these things helpful in controlling their healthcare cost of the beneficiaries in their plans - MAYBE.

You might enjoy this article and it fits right into your question:

Reuters 12/07/2018 - Medicare Advantage plans get unfair push from U.S. government: critics 

So does government want private insurers to play a bigger part in government-sponsored health coverage - probably so, since they seem to do a better job in controlling many of the cost which government seem to have a hard time doing - maybe because the government job relies on the "giving" and not the managing of care in the most efficient manner. 

[somarco]

@GailL1 carriers that write MA plans make money by controlling claims. Medical claims consume 80 to 85% of revenue. Trying to squeeze the balloon on advertising and promotion will generate nominal savings if any at all.

Overhead including advertising dollars is a very small percentage of the total pie.

Those expenditures are not allocated by line of coverage but rather as a total percent of revenue. The green eye shade folks don't assign beans by department or coverage lines.

Personally it does not matter to me how much or how little a carrier spends on promoting MA plans. Carriers are compensated by CMS based on a number of factors including loss ratios. 

At least carriers are held accountable for their dollars. Government is accountable to no one.

If their loss ratio is less than the CMS guidelines that carrier will receive lower compensation the following year than they would have normally. In other words, carriers have a disencentive to hold down claim costs.

You can bet the actuaries are monitoring loss ratios on a quarterly basis to make sure they have favorable loss ratio's but not TOO favorable.

In the big picture carriers control claim dollars via smaller networks, cost shifting, claim denials and other means.

These plans are called managed care for a reason. Neither the patient nor the provider are managing care. Rather it is the CARRIER that decides WHERE the patient receives care, what KIND of care they receive, and how MUCH.

Most Medicare advisors (SHIP, agents, carrier reps, Medicare "agents", etc) have no idea how to compare one MA plan with another. And there are very few consumers who understand the complexities of MA and PDP plans which leads the majority to make poor choices.

It's all fun until the party is over. That's when folks wish they had made better decisions.

https://www.npr.org/sections/health-shots/2017/07/05/535381473/as-seniors-get-sicker-theyre-more-lik...

Useful information on commercial and government sites is almost impossible to mine, even if you know what you are looking for.

[aruzinsky]

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@somarco wrote:

It's all fun until the party is over. That's when folks wish they had made better decisions.

https://www.npr.org/sections/health-shots/2017/07/05/535381473/as-seniors-get-sicker-theyre-more-lik...

That is a bad article because it fails to differentiate between HMO and PPO plans.  PPO makes out of network services cheaper for the patient.  I suspect that the whiners mentioned in the article had HMO plans.  HMO plans are for suckers.

[aruzinsky]

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@somarco wrote:

@GailL1 carriers that write MA plans make money by controlling claims. Medical claims consume 80 to 85% of revenue. Trying to squeeze the balloon on advertising and promotion will generate nominal savings if any at all.

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According to you, advertising consumes, at most, 20% of revenue.   That is still a potentially significant savings.

[somarco]

Carriers are given money for every MA policyholder. The amount varies based on a formula but the base is in the $700/month range.

Carriers are allowed to spend/invest that money however they choose. Those dollars can be used to offset claims, cover administrative costs, pay commissions and fund advertising.

And yes, MA plans are extremely lucrative for most carriers. But also to Medicare.

But in case you have not noticed, CMS is also pushing MA plans on folks who access medicare.gov. This is especially true if you access the Plan Finder.

The Medicare and You handbook also promotes MA plans.

Shuttling folks off of traditional Medicare and onto an MA plan is a cost saving feature.

To them, not necessarily to you.

[aruzinsky]

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@somarco wrote:

Carriers are given money for every MA policyholder. The amount varies based on a formula but the base is in the $700/month range.

Carriers are allowed to spend/invest that money however they choose. Those dollars can be used to offset claims, cover administrative costs, pay commissions and fund advertising.

And yes, MA plans are extremely lucrative for most carriers. But also to Medicare.

But in case you have not noticed, CMS is also pushing MA plans on folks who access medicare.gov. This is especially true if you access the Plan Finder.

The Medicare and You handbook also promotes MA plans.

Shuttling folks off of traditional Medicare and onto an MA plan is a cost saving feature.

To them, not necessarily to you.

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What does this have to do with the topic?

[somarco]

@aruzinsky perhaps you need to read your own post and see if you can connect the dots.

[aruzinsky]

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@somarco wrote:

@aruzinsky perhaps you need to read your own post and see if you can connect the dots.

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The missing dot is how much insurance companies spend advertising Medicare Advantage plans.  Instead of addressing this, you talk too verbosely around it.

[fffred]

That's an interesting thought.

I don't think it would save the CMS (Medicare) any money as the ads are paid for by the insurance companies, and I doubt they can bill Medicare for these. It's a cost of their own business.

But your observation does show that the insurance companies must be making a lot of money from these plans (and if I understand these correctly they handle "Medicare" claims for "Medicare"). Certainly someone's making a ton of dough, and it's surely not CMS!

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@aruzinsky wrote:

How much money would Medicare save, if it contractually forbade insurance companies from advertising Medicare Advantage Plans?   All of those obnoxious TV commercials must cost a fortune. And they are completely unnecessary because all of the information that customers need is already available for free at

https://www.medicare.gov/plan-compare/#/

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[aruzinsky]

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@fffred wrote:

That's an interesting thought.

I don't think it would save the CMS (Medicare) any money as the ads are paid for by the insurance companies, and I doubt they can bill Medicare for these. It's a cost of their own business.

But your observation does show that the insurance companies must be making a lot of money from these plans (and if I understand these correctly they handle "Medicare" claims for "Medicare"). Certainly someone's making a ton of dough, and it's surely not CMS!

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@aruzinsky wrote:

How much money would Medicare save, if it contractually forbade insurance companies from advertising Medicare Advantage Plans?   All of those obnoxious TV commercials must cost a fortune. And they are completely unnecessary because all of the information that customers need is already available for free at

https://www.medicare.gov/plan-compare/#/

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No, that extra money can only go to three places:

1. The insurance company

2. The consumer

3. The government

Cut throat competition on the Medicare website will prevent the extra money from going to insurance companies.  If consumers settle for unimproved plans, the extra money will go to government.