So much for the Medicare managed-care honeymoon. Come Jan. 1, more than 400,000 elderly Americans will get the boot from their health maintenance organization. This mass abandonment is a function of stark economics: Many Medicare HMOs simply aren't making money. It's also about politics--insurers want Congress to change the rules in their favor.
Those Medicare recipients left high and dry will have to hustle to find new health insurance. For many, it won't be easy to get comparable benefits at the same price. You're guaranteed the same minimal coverage as everyone else over 65--but nothing more. And your old HMO is legally required to help you find alternatives--but not to help pay for them.
PRICIER PLANS. In all but a few areas where HMOs have exited altogether, you--or your older family members--can enroll in a new managed-care plan. Your current HMO will send a list of available plans by Nov. 2. By that date, too, Medicare vows to post detailed comparisons of HMOs on the "Medicare Compare" section of its Web site (www.medicare.gov).
Any Medicare HMO operating in your county is obliged to accept anyone who applies within 63 days of Jan. 1, with immediate, full coverage of any preexisting medical conditions. Most likely, the benefits will be similar to those of your old plan. There's a good chance it will cost more, though, in the form of higher premiums or co-payments--the fees charged each time you visit a doctor or get a prescription filled. Your old HMO pulled out for a reason, after all: It wasn't getting enough money to cover costs.
Before picking a plan, look closely at enrollment materials. Are your physicians in the new HMO's network? If not, you'll have to switch doctors. Then, determine "what constraints are there, medical and financial" says Diane Archer, director of the Medicare Rights Center. Some HMOs, for example, cover an unlimited amount of drugs. But more plans are charging co-payments of $10 or more per prescription and capping annual drug claims at $1,000 or lower. Above that, you pay the bills.
If the extra expenses are steep enough, or if your doctor isn't in the network, consider going to traditional fee-for-service Medicare. If you do nothing by Jan. 1, you'll be enrolled automatically in Medicare Part A, the mandatory plan that covers most hospital expenses. Part B, which is optional and costs $43.80 a month, pays 80% of most doctors' charges. But both parts together don't cover as much as HMOs do. Their deductibles and 20% co-payments will add up quickly if you're seriously ill. So to match the security of your old HMO plan, you'll need a supplemental Medigap policy.
The government guarantees that any Medicare recipient dropped by an HMO can buy four of the 10 standard Medigap policies from an insurer for the same price as anyone else--again, regardless of medical history. The catch: The remaining six, including those that cover drugs, can turn down applicants for any reason. Also, supplemental policies can be pricey--from $40 a month for the most basic, which covers the remaining 20% of doctors' bills, to up to $260 for a deluxe plan that includes drug benefits and at-home care. That's a reason many seniors flocked to HMOs in the first place.
Should you make the switch? True, managed-care plans' benefits are superior to traditional Medicare, given the cost. Yet many consumer advocates fear that this year's wave of HMO pullouts portends more dislocation to come. Unless Congress authorizes higher payments to insurers--an iffy prospect--HMOs likely will continue to raise costs to members while scaling back benefits. "The most important lesson from this is that senior citizens should be extremely cautious about opting into managed care," says Ron Pollack, executive director of the Families USA Foundation, a health policy group. Better to wait, perhaps, until the dust settles.