Month: September 2024

Author’s note:  This article is a departure from the typical “foibles of life” rants that I post each week.  We are approaching the Medicare enrollment season, and I am frequently asked about the differences between Traditional Medicare with a supplement and Medicare Advantage coverage. So this is a serious article that attempts to contrast these two alternatives and highlight the historical factors that created two very different products.  Most of you will not be interested in Medicare alternatives and may want to pass on this week’s post.  A number of you, however, may find the information helpful as you review your Medicare options for 2024.      

A few months ago a friend of mine asked me a question about Medicare.  He was retired and his previous employer switched all of the retirees to a Medicare Advantage program for their health insurance benefits.  He asked, “What in the world is Medicare Advantage and is it my only Medicare option?”

Medicare Advantage is an interesting challenge.  

A little background about Medicare can help us understand how we moved to the current environment of Traditional Medicare and Medicare Advantage.  

The Evolution of Medicare

Medicare is not very simple.  The primary reason for the complexity is that it is such an incredibly expensive undertaking by the Federal Government.  Next to Social Security, it is the largest expenditure in the federal budget.  How expensive?  In total, the Center for Medicare and Medicaid Services (CMS) spent $1.48 trillion in fiscal 2023 for Medicare and Medicaid benefits.  Total tax revenues for the Federal Government for fiscal 2023 were $4.5 trillion.  So 33% of the tax dollars went to government sponsored healthcare programs.  That leaves 67% for all of the other products and services the Federal Government supplies.  Things like Social Security and national defense.  Even senate bean soup. Our elected officials cannot simply wave a magic wand and pay for Medicare.  It is too big, even for them.  So many of the strange provisions of Medicare are directed to keeping costs in line with what the Federal Government can afford.    

Over the years, the US Government has tried to accommodate the ever rising cost of healthcare by tweaking Traditional Medicare.  First they increased premiums. Costs kept rising. So they limited benefits and sheared off optional coverage for Medicare recipients.  They established a series of Medicare Supplement coverages that could be purchased from independent insurance companies, passing, perhaps, 20% of Medicare costs back to the recipients.

Today, Traditional Medicare is a standard policy for the entire country. It is totally controlled by one entity, the granddaddy of all insurance companies, the Federal Government.  It provides access to nearly every healthcare provider in the country and there is no arguing or debating over the benefits that will be paid.  Every healthcare entity must accept the compensation documented in the CMS rating schedule. The optional Supplemental coverages are totally regulated by CMS.  If a claim is accepted by Medicare as the primary insurer, it has to be accepted by the Medical Supplement insurer as the secondary insurer.  The required coverages for all of the Supplemental Plans are the same.  Aetna’s Supplement G will not have benefits that differ from Blue Cross Supplement G.

Traditional Medicare is comprehensive and easier to administer because there is one set of rules controlled by CMS.  However, it is not inexpensive and healthcare costs continued their steep rise.

So the Center for Medicare and Medicaid Services, the health insurance industry and the healthcare industry searched for a new program to control Medicare Costs. The result was Medicare Advantage which is also referred to as MedAdvantage or Medicare Part C.   

Whereas most of the risk for Traditional Medicare is assumed by the Federal Government, nearly all of the risk for Medicare Advantage is assumed by private insurance companies.  The US Government pays the private insurers a premium of, approximately, $1,100 a month for each Medicare Advantage enrollee.  The private insurance companies are on the hook from there.  If it is a bad year for medical claims, the insurance companies lose not the Federal Government. On a personal level, you can appreciate the huge cost of Medicare.  The Federal Government is actually paying a $2,200 per month premium for a two person household.  If they did not, how would you like to factor this expenditure into your monthly budget?   The insurance company is the primary insurer and the private insurance companies provide all of the Medicare Part A benefits (hospitals), Medicare Part B benefits (physicians) and all of the Medicare Part D (prescription drug benefits). 

How can private insurers provide coverage at less cost than CMS? 

First, they establish networks of health care providers and negotiate lower benefit payments with hospitals and doctors in the networks.  For example, The Acme Insurance Company will go to Megopolis Health Systems and negotiate a much lower rate for services than the standard Medicare rate.  Why would Megopolis agree?  Acme may have a substantial number of Medicare Advantage policyholders in the geography covered by Megopolis.  If Megopolis cannot agree on an appropriate rate and become a member of the Acme network, they will not have these policy holders as patients.  Acme will continue to negotiate unique rate structures for as many providers as possible in the same region.  Ultimately, Acme wants to create a network of substantially all doctors and health care facilities in a region who will be paid discounted fees for the services they provide. 

Second, the private insurers do not have to offer all of the benefits that Traditional Medicare offers.  The benefits are robust and the plans must be approved by CMS.  Covered medical benefits may be very similar but not identical.  It is a safe bet that any differences will result in fewer benefits in the Medicare Advantage plans. 

Third, Medicare Advantage plans offered by independent insurers require pre approval for healthcare services much more often than Traditional Medicare.  In theory, the insurance companies are ensuring that the services appropriately qualify for coverage.  In reality, the prequalification may significantly delay services and, often, the insurance companies inappropriately declined services that should have been approved.  For example, in 2021, there were 35 million requests for pre-approval by Medicare Advantage policy holders.  2 million were denied.  11% of the 2 million appealed the denial and 82% of the appeals were won by the policyholders.

Fourth, Medicare Advantage policies have a very wide range of options for deductibles, co-insurance and maximum out of pocket limits for approved claims.  Often, they achieve zero premium coverages by bumping up the amounts policyholders must absorb when they submit claims.   

Fifth, the Medicare Advantage offer includes a Medicare prescription drug benefit.  The formulary is reviewed and approved by CMS.  However, it is the result of the best negotiation the private insurer can strike with pharmacies and drug companies.  With Traditional Medicare, the policyholders can choose from any of the Medicare D policies that are offered in their region.  Typically there are twenty to thirty options and some are much more favorable to some insureds than others.  For example, I had a prescription change in 2024.  I have Traditional Medicare.  My current drug plan indicated that my out of pocket costs for 2024, with the new drug, would be more than $59,000.  I chose a different plan with a different formulary and my total out of pocket cost is less than $3,500.  If I was enrolled in Medicare Advantage, I could not make that change.     

Medicare Advantage did a great job of achieving cheap.  By driving down benefit costs, private insurers can offer a number of additional benefits to their policyholders.  Frequently, they tacked on wellness programs, vison coverage, hearing coverage and dental coverage to the medical benefits required for all plans by CMS.  Often the private insurers would establish very favorable rates with the health care providers to the extent that no premium was required from the Medicare recipients.

Medicare Advantage products may be sold to individuals or to large employers for their entire group of retirees.  

What keeps private insurance companies from raking in extraordinary profits with their Medicare Advantage products?  Two significant factors.  First the Federal Government, through CMS, pays the lion’s share of the premiums.  CMS understands Medicare better than anyone and they are very careful to ensure that the premiums they pay private insurers are not egregious.  More importantly, private insurance is a highly competitive capitalistic enterprise.  There are dozens of Medicare Advantage plans offered by many different companies.  If one insurance company gets strong handed with the rates they offer to their Healthcare Provider base, another company will negotiate a better deal with those providers.

A final complicating factor with Medicare Advantage is that you may not be able to switch from Medicare Advantage to Traditional Medicare if you have significant health issues.  The Federal Government stood on the soap box with the Affordable Care Act and preached that pre-existing conditions should all be eliminated from every health insurance plan.  Traditional Medicare has one.  If you do not sign up for a Medical Supplement when you first enroll in Medicare, you may be required to pass a health care review before being allowed to enroll in the future. So, signing up for the cheap Medicare Advantage product when you are completely healthy and switching to Traditional Medicare when you develop a particularly dangerous form of cancer may not be possible.      

The Dilemma

For many years, the primary emphasis for modifications to Medicare has been directed to controlling costs.  There has not been a lot of change that impacts the usefulness of Medicare to the millions of Americans enrolled in the program.  Because of the variability of Medicare Advantage, evaluating whether to enroll in Traditional Medicare or Medicare Advantage is difficult.  No matter which direction you go, you gain something and lose something.  Finally, the factors impacting the decision are definitely not the same for everyone.

If you are totally healthy and do not plan on having any major healthcare issues until a few days before you die, Medicare Advantage is for you.  If you are planning on developing a dread disease that only a few doctors at the Mayo Clinic and Johns Hopkins can treat, Traditional Medicare is for you.  The obvious problem is that we cannot know the answer to either of these health situations before we enroll in a Medicare Plan.  So the dilemma is “do I go with cheap because I’m healthy or do I go with the more expensive plan because I have the most options if something bad happens?” 

The friend who asked me the question about Medicare Advantage is retired from a very large company in Southeastern Michigan.  The Preferred Provider network offered by the private insurer includes all of the major healthcare providers in the region, including the “gold standard” University of Michigan system.  This may work very well as long as he lives in Ann Arbor.  Many of the company’s retirees have moved.  The benefit does not look so good for some of those participants.  The Medicare Advantage networks in Jacksonville Florida, Minneapolis Minnesota and Phoenix Arizona are not as appealing because the Mayo clinic does not accept Medicare Advantage patients. However, the Mayo does accept Traditional Medicare.  A few who have moved to Whidbey Island Washington may have very poor choices in a network that is primarily focused on Southeastern Michigan. In essence, the usability of a regional PPO network may be better suited to a group that all live in the same region.

Drugs can be a huge expense.  Do I want to be limited to the single drug plan of my Medicare Advantage carrier or should I enroll in a Traditional plan that will allow me to change Medicare D plans based on changes in my prescriptions?  In my case, enrolling in a Traditional plan dropped my drug charges $55,500 a year.  For me, a Traditional Policy was far less expensive than a Medicare Advantage policy.

Summary

So my friend has this choice. 

He can stay with the Medicare Advantage plan offered by his employer.  He will have Silver Sneakers wellness, a vision policy, a hearing policy and dental coverage.  There is no premium required to participate.  In fact, whether or not coverage is provided by his employer, there are a number of Medicare Advantage plans that have little or no premiums.  Currently, he and his spouse are in good health and all of their doctors are in the PPO associated with the plan.  He will have to accommodate the cumbersome pre authorization process for many healthcare procedures.  He may not be as pleased with the network options if he moves from Southeastern Michigan.  He will have to use whatever drug coverage is offered by the Medicare Advantage insurer.  He will have to pay a combined premium for him and his spouse of $350 per month for the required Medicare Part B.

My friend can drop the employer coverage and sign up for a Traditional Plan with Supplement G.  A health review may be required.  If the two pass the review, total premiums for him and his spouse will be approximately $750 per month (including the $350 Medicare Part B premium).  So the premium differential for two people is $400 per month.  With this plan, he can become a patient of any health care provider in the country and have 30 different options for drug coverage.  This is the best possible hedge against a catastrophic health event in the future.

In spite of what the marketing people may say, Traditional Medicare is an apple and Medicare Advantage is an orange.  Far and away, most of the effort directed to improving the products has been to address the challenge of continually rising healthcare costs.  For you, MedAdvantage may or may not be less expensive.  It is very challenging to accurately make that determination.  However, a lot is riding on this decision.  We all need to know what the real impact is for us before we make it.

My wife and I relocated our family from Ann Arbor Michigan to Jacksonville Florida in 1974.  At that time, the population of Jacksonville was 350,000.  We asked the Jacksonville Chamber of Commerce for information about the city.  They summarized the ethnicity of the city as follows: “3% of the population are of Asian descent.  15% are from Europe.  All the rest are Southerners.”

I took a position as Controller of an insurance company and quickly found that at least 80% of my coworkers were from the South.  I had a language problem.  I neither spoke nor understood Southern.  All of my associates were very patient and helpful.  They welcomed our family with open arms and taught me how to understand and eventually, speak the language fluently.

Let’s start simply with the most common Southern expression.  Y’All.  First, this is a one syllable word.  It is definitely not pronounced “You All”.  It is not “Ya All”.  It is a homonym of Yawl and it rhymes with Call.  One syllable.  Most southern accents may drag out the alllll part a little but it is still one syllable.  Contrary to popular belief, it is always plural.  If you ask one person if they are going to the ball game this afternoon and you say “Y’All going to the game?”  They will think you are from Hoboken New Jersey.  Some have inferred that “Y’All” is singular and that the plural is “All Y’All”.   That is incorrect.  Beauregard’s History of Southern Expression clearly notes that “Y’All” is plural. “All Y’All is creeping into the Southern language.  Occasionally, a citizen from Valdosta will use “All Y’All” to refer to a very large group or “whole passel” of people.

Albany Georgia is pronounced differently than Albany New York.  The Georgia city is “all benn’ nee” with the accent on the second syllable.  Other cities in Georgia include Houston, which is pronounced “house ton” not “hue ston”.  Berlin Georgia, in Southern, is “burr’ lin” with the accent on the first syllable as opposed “burr lin’ the capital of Germany. Vienna Georgia is “vie enna”, with a long I, not “vee enna”, with a long E.      

Jacksonville natives do not greet you by saying hi or hello.  They say “Hey”.  “Hey Sue!  Are you having a good day?”  If Sue indicates that she is not feeling well.  The southerner will reply “I’m sorry you’re feeling puny.”  In Michigan you’re sick. In Jacksonville you’re puny.  If you are puny and have a headache, you might want to take a Goody’s Powder.                 

The really spectacular element of the Southern language are the expressions.  I had the great fortune to work with a person from LA.  To Southerners, LA is not a city in California.  When you say LA in Jacksonville, you are referring to Lower Alabama.  In fact, this person was from Dothan.  Jim had the best expressions and the best speaking style in the world.  Here are some examples.

We sat through a vendor presentation on accounting systems and I asked Jim what he thought.  Jim was very skeptical that the system could do everything the representative claimed. “I think he’s peeing on our shoes and telling us it’s raining.”  In addition, he did not think the presenter was overly bright.  Jim added “That boy reminds me of Paul Revere.  Light in the belfry.”  If Jim was buried in work he was “Busier than a one legged man in an ass kickin contest”.   Can you get this job done today, Jim?  “It’s no hill for a stepper. I might could have it by three.”  What do you think of that barbecue Jim?  “It went down better than a chubby kid on a teeter totter.”   Hey Jim.  You doing all right?  “I’m great! Never had more nor wanted less.” Jim never did anything on the weekend he would do it on “Saturday or Sunday, one”.  

Jim had a dog.  A Blue Tick hound.  His name was Rolex.  I said what a great name for a dog.  How did you come up with that?  Jim said he’s a watch dog.

Jim spoke with a big booming voice.  If you closed your eyes you thought you were listening to Foghorn Leghorn.  Hopefully, Y’All remember the big chicken on Looney Tunes who was constantly pursued by Henrietta the Hen and the little Chicken Hawk.  Foghorn was always talking very loudly saying things like “If that kid… I say… If that kid don’t quit talkin, he’ll get his tongue sunburned.”  No doubt the genius Mel Blanc spent some time in Dothan Alabama because everyone there sounds like Foghorn Leghorn.

In a few months at the insurance company I was taught to “Mash on the light” if the room was dark and to “Let the Big Dog Eat” if I had to accelerate to pass another car.  “It’s coming up a cloud” if the afternoon thunder storm was forming and “It’s a frog strangler” when the down pour started.  I learned that “The big raccoon walks at midnight” if you were behind early in a poker game and “It’s hard to come back if you’ve never been there.”    

Great expressions.  Great humor.  Great people.  Great values.  We have enjoyed Jacksonville so much that we have stayed here for almost 47 years.

The metropolitan area has grown a little from 350,000 citizens to 1,350,000. There are large pockets where the Southern influence has completely disappeared.  Of course, this is happening everywhere in the United States.  Regionalism and colloquialisms are on the wane.  We all are starting to sound like TV commentators. 

I would love nothing better than to have a long slow supper at Jim’s house.  He could regale Sue and me with all of the interesting things that have happened to him in the last 30 years.  After a couple gallons of syrupy sweet tea and a few beers we would wrap up around midnight.  Jim would say he hadn’t had this much fun since “Granny’s goat roping” and he would invite us back with “Y’All come back! Heah?” 

Life would be great.  “If I was any better I would be twins.”  Damn.  I need to find a place to go and speak more Southern.  I may book a leisurely visit to Dothan. I could go on ‘Saturday or Sunday, one”.             

I was reminiscing the other day about the great Flip Wilson.  In the sixties and seventies he hosted a classic variety show on network TV.  As I remembered, he was the absolute master of the “shaggy dog” story.  Long involved stories that would run for many minutes and culminate in a real groaner punch line.  This was perfect humor for me. 

I had not actually viewed one of Flip’s performances in more than forty years so I thought my memories may be aggrandized and inaccurate.

Through the wonders of modern home entertainment, I did a search for Flip Wilson and found that an obscure “oldies” streaming service carried the original Flip Wilson show.  I dialed in the first episode. As it turns out my recollections underestimated the length and depth of Flip’s story telling.  He opened his first show with two hilarious Flip Wilson Stories.  One even included Geraldine.  They ran on forever.  It took more than fourteen minutes to tell two jokes.  The stories were hilarious and they ended with the worst pun like punch lines.  This was even better than I had remembered.

So I thought I would share a few Flip Wilson Stories with you.  These are not jokes actually told by the great comedian.  Relaying the two jokes he told in Season One, Episode One would require a hundred page post.  These are jokes that I have always categorized as Flip Wilson Stories.  If told properly, the people hearing the jokes may believe that they are actually real events until you pop them with the punchline.

Story One.

Rene Descartes spent many years developing his philosophies in Vienna.  He spent hours in the coffee houses extrapolating complex theories with a number of other great thinkers in the city. 

Overtime, he and Wolfgang Schmidt became great friends.  Wolfgang’s day job was training the, world renown, Lippizan Stallions.

One day, Wolfgang was running a horse through his paces when Rene burst into the stables.  Rene said, “Wolfgang! I haven’t slept in three days!  I believe that I have developed a proof for an amazing theory about humanity.  I believe I have all of the elements in place to prove that we can validate our existence simply because of our cognitive capabilities.  I call it ‘I think, therefore I am’.  You need to run through the proof with me.  It’s revolutionary!”  

“Wow!  That’s terrific Rene.  I really should put more time in with this stallion before tonight’s performance.  However, I don’t want you to lose these valuable thoughts.  Let’s get some coffee and chocolate and run through the entire theory.”  

“Thank you Wolfgang.  I really appreciate it.”  Little did Wolfgang know that he was already part of a significant human event. 

This was the first recorded incident of a man putting Descartes before the horse.

Story Two.

A man owned a dog that was overly protective.  The dog was congenial with his family, the clan, but was constantly nipping at anyone who visited his home.  He tried all of the classic techniques to stop the animal from biting but had no success.  Finally, he retained a dog whisperer. 

The trainer said that one simple change would break the biting habit.  The owner needed to give his pet piano lessons.  If given instructions on how to play classical music the dog would stop chewing on his guests.  The trainer said, “I know this sounds ridiculous but, in my opinion, it is probably the only cure for the problem and it has been successful with other clients.”

So the owner googled “Animal piano teachers specializing in canines and classical music.”  There were eighteen within five miles of his house.  He sent an email to the first instructor on the list and made an appointment for the following Monday.  After an hour lesson the instructor said that Fido was off to a great start.  If the owner wanted to continue the lessons, give him another call.

The owner returned home and tested Fido.  He put the dog on the front porch.  The mailman came by and the dog didn’t budge.  Amazon dropped off three big boxes, Fido never got off the welcome mat. He ordered a pizza from dominos and DoorDash from the Chop House.  The dog could care less.

The owner was overjoyed and extended the lessons, indefinitely.  Every Monday at 3:00 PM he spent an hour cleaning up his emails while his dog continued the classical music lessons.  Fido never nipped at anyone starting with the first lesson. 

Finally, after eleven months, the owner decided that, with all of these lessons, he should ask his friends over to listen to Fido play the classics.  He rented a concert size Steinway piano.  He retained the Ritz Carleton to cater the event and he invited twelve close friends over for the performance.

As it turns out, Fido was a terrible pianist.  Friends started to leave after a few minutes.  The longest one stayed for eleven minutes.  Nine months of continuous lessons and the music was unbearable. The next day the owner called the piano instructor and cancelled the lessons. 

It was very clear that Fido’s Bach was worse than his bite.   

Story Three (perhaps the world’s shortest Flip Wilson Story)

I just read an interesting story about David Copperfield.

Early in his career he used a lot of white rats in his tricks.  He bought some from a pharmaceutical company and found them to be very agitated and skittish.  It turns out that the critters had been used in heroin addiction experiments.  David was very sensitive to the welfare of the animals he used in his show, so he very patiently withdrew all of the rodents from their addictions.

As it turns out, he was the first magician, ever, to pull a habit out of a rat.

So Flip was the greatest.  I encourage you to dial in his old shows.  His verbal and physical comedy is incredible.  He will start on a Flip Wilson Story.  As the plot unfolds, he will bring in Reverend Leroy from the Church of What’s Happening Now or Geraldine or somebody else.  There will be five to ten great belly laughs before he gets to the pathetic punchline.  You will wonder why you paid close attention for so long to hear the pitiful ending. 

Then you will sit on the edge of your chair and hope for another one.  

The NCAA has announced a change to the status of bowl games for post season play in 2024.  The designation of a “Game” implies a competition where each team marshals their best effort and skill to win a contest.  In post season 2023, there were 41 contests that used to be called Bowl Games.  Only three of those could be considered games.  All three of those were arranged to determine the National Championship.  The remaining 38 Bowls, at best, must be called “Exhibitions”. 

Let’s look at 2023 “Exhibitions”.  Starting at the top, the number 5 ranked Florida State Team, undefeated in the regular season, has at least eleven starters sit out the contest with Georgia and loses a squeaker 63 to 3.  This was nothing like a game.  FSU finishes one position out of the playoffs and the best effort they have for the “Exhibition” is one of the most lopsided losses in bowl history. 

This event is closely followed by the Ohio State versus Missouri “Exhibition”.  In the last regular season game, OSU has the ball in Michigan territory with less than a minute left in the game.  If they connect with the best receiver in the country (Harrison) on their last play of the game, they are number one in the country and locked in to the first seed in the National Championship playoff.  A Michigan interception with 35 seconds left stops the drive.  Ohio drops out of the top four and loses several key players.  Their starting quarterback and Harrison among them.  The odds makers immediately make them underdogs to the 2 loss Missouri team.  Never underestimate the skill of odds makers.  In the “Exhibition” Ohio never advanced the ball to the red zone once in the entire game.  The powerful buckeyes posted a whopping 3 points.  Not a “Game” and never intended to be a “Game”.           

How about attendance at the “Exhibitions”?  The Duke Mayo Bowl drew 42,925.  The Military Bowl attracted 35,849.  The historic Holiday Bowl had 35,317.  The Pop Tarts Bowl, in the attractive Orlando location, sold 31,111 tickets.  Finally, the Wasabi Bowl in venerable Fenway Park drew 16,238 fans.  There isn’t a high school team in Texas that doesn’t draw more fans for every home game than these “Exhibition” Bowls.  Fans don’t come because these are not games.  They are “Try Outs”.  Most of the Players who had sufficient skill to jump through the portals to a Sacred 20 team did so after the regular season.  Players who were not able to jump through the portals after the regular season are trying to show their stuff in hopes of making it to the top 20 or a low round NFL draft pick.    

According to the NCAA, the economics of college football are best served by promoting no more than 20 major football programs.  They are the ones with real money.  The remaining colleges are considered farm teams and the nature of post season play needs to be changed to support the goals of the Sacred 20.

In an effort to reduce the possibility of injuries associated with the “Try Outs”, there will be a number of rule changes for 2024.  First, all the exhibitions, other than the Championship Playoffs will be played with flag football rules.  Second there will be a skills competition.  The NCAA gurus favor a punt, pass and kick competition.  PP&K has been held by the NFL for 6 to 15 year olds for more than 50 years.  The event has been totally injury free.  The likelihood of any college prospects getting hurt is near zero.  Importantly, all 200 players on each team will be timed in the forty yard dash.  This riveting event, alone, will provide several hours of entertainment for the Bowl “Exhibition” fans.

They are also trying to weave in a pre or post Bowl “Exhibition” event called “Show me the Money”.  It will be in a game show format where fans can watch actual negotiations between players and player representatives.  They anticipate hilarious scenes where 315 pound defensive linemen attempt to intimidate 145 pound lawyers.

Never let it be said that the NCAA does not provide a great product for college football fans.  Of course, with the robust agenda of Bowl “Exhibitions”, the price of tickets will be going up.  It will set you back at least $350 to watch the 2024 season Wasabi “Exhibition” in Fenway.  The increased pricing should really boost attendance.  They may not eclipse the 16,238 mark set in 2023 but they will probably break 10,000.