Wednesday, April 6, 2022

Navigating Medicare


The problem

The end of each year brings over two months of insurance reassignment, the “open enrollment” period.  This is in addition to the regular nonstop Medicare signup as everyone turning 65 signs on to thousands of Medicare insurance programs.  Not just over-65s, but low-income (Medicaid), plus disabled, are eligible.  Four additional months of the year (ending March 31) are hunting season for Medicare Advantage plan-changers. 

Half the time the phone rings, that’s what’s on the other end: an invitation to enter a bewildering universe of costs and options without any rational or obvious route to navigating that world. 

This national decision-making marathon is the natural outcome of the “customer-first” trend in medicine.  And while that sounds empowering, it actually means that healthcare customers are increasingly responsible for decisions well beyond their education level or even their ability to ask for and organize information in strategic ways.  This goes along with being required to select treatments and compare risks, decisions for which patients have no training. 

Decision making

Decision-making science is an education in itself, and even when they are aware of the basics, few people can implement this skill in any systematic way.  Rather than rational procedures with principles and guidelines, most major decisions are 95% right-brained, emotional responses to hoped-for results to get a compound-complex process over with.

For most people, we understand pieces of the puzzle (but not the entire system) and just have to hope it all comes together for our future quality of life, health, and finances.  This is a poker game we know very little about when it comes to high-stakes betting.  What’s important is to distinguish between critical and less-critical decisions within the game.  And a good sense of probability calculations.  As Charles Duhigg puts it in Smarter, Faster, Better (2016), “How do we learn to make better decisions? .....Regardless of our methods, the goals are the same: to see the future as multiple possibilities rather than one predetermined outcome; to identify what you do and don’t know; to ask yourself, which choice gets you the best odds?” 

The options

What do the puzzle pieces look like?  Costs include premiums, deductibles, and copays, both within and outside the Medicare system or the Supplement or Advantage plan under review – and compared between plans.  Then there are all the time frames that define when care can be given, how often, and in conjunction with other treatments, along with any follow-up care.  Where will services be available?  Locations, clinic type (there are several, ranging between in-patient hospital, emergency centers, offices, urgent-care, ambulatory, observational, etc.).  Then post-procedure stays, long-term care for chronic cases like long Covid (which will be an upcoming major line item in the decision tree as a disability), at-home, nursing centers, and more. Watch for important exclusions and limitations in services, cost, and scheduling. 


Basic keys

These are led by three: does the potential plan cover my current providers?  Does it cover my medications? (Average is $1200 spent per year).  What will it cost or save—compared to what I pay now (premiums and copays)?  These are big-ticket decisions whose consequences usually become clear only after choices are made, procedures undergone, and the bill arrives.  The choice of insurance plan amounts to a critical partnership between the patient and a complex system that can’t be understood in advance of billing outcomes—when it’s discovered that your procedure wasn’t covered, or is attached to services uncovered. Sitting in the dental chair about to be fitted for a molar crown is no time to be told that porcelain is an extra $300. 

In parallel, when Mom’s health starts to fail, millions now realize they don’t really understand the full rulebook for her long-term care policy.  The percentage of long-term care payers who ever use their insurance is far less than half. Plenty of anguish and suffering results from failure to make the right choices, and that depends on getting good decision training.

The number of decisions, based on the Evidence of Coverage, is simply overwhelming.  There is no way that anyone can foresee what services and procedures and drugs they will need, even for the near future.  And quite difficult to construct equations that can show parallels between plans, as each line item can differ in coverage or scope as well as cost.  Is it better to have a higher deductible (copay) for a hospital visit, or a lower one with fewer benefits?  This is one example of the difficulty of comparing unequal line items.  And then there are dozens—hundreds—of other comparisons the customer can try to make without fully understanding what is being compared.  At the bottom line, there is a confused list that doesn’t carry over to rank two or three or four plans.  That means there is no confident bottom line for price—or for coverage, either.

Brain basics

Prospect theory says that we are more afraid of losses (about 2.4 x) than rewarded by gains.  Any single difference changes the equation; it can take hundreds of hours to puzzle out. This includes understanding what you don’t need to buy—expensive extras or guarantees that increase the bottom line without adding any value.  Does the monthly cost of a hospital indemnity plan (at $30-$60 and up) actually justify the expected hospital stays?  The actual number, of course, is an unknown quantity. 

You only find out how good or poor decisions were when the medical incident strikes and you need to use it.  Things will be fine—until they aren’t.  Either you can’t use the plan or what you need costs more than expected—sometimes thousands more. But hindsight is a hard way to learn. You need to know what obstacles could be involved in advance, and how to navigate these when they emerge.  This takes a sophisticated, experienced decision partner to review the options.  Pitfalls aren’t visible until you are falling into them (that’s their purpose).  Your new formulary may charge you $500/month for a drug that was free under the plan you had last year.  Providers change plans (your doctor could be one of them). And the plan you have now can always announce changes for next year—including their brand names, which leads to more confusion. Over half of the adults in a Bloomberg survey on debt reported that healthcare costs were the leading source (led by emergency-room visits), at over $10,000 for one in four.

There is an essential fact worth keeping in mind here: humans don’t like making decisions--under any circumstances.  Especially for high-stakes issues with complex rules we can’t understand or know how to apply, in a field based on medical, high technology, and complex financial systems. Once executed, the choice can’t always be reversed or undone in time to prevent costly further decisions.   Add this uncertainty to our ignorance of accidents and illness in the future. Decision avoidance could keep us from making very logical changes to coverage we now have but don’t understand at all well until we need it—and this unfamiliarity itself encourages active avoidance.  Ongoing discomfort with low Medicare understanding can result in ignoring the Open Enrollment period, just when choosers should be wading into the change process because their health and finances could benefit.   

Navigating the system

How do Medicare insurance plans advertise?  Each year mailbox and email are choked with flyers about supplemental benefits: health clubs, cooking classes, transportation, delivered groceries.  OTC allowances and home nurse wellness visits are largely diversions, a form of emotional window dressing.  These are actually the most immediately compelling and likeable features by which private insurance advertises, because they are the most viscerally appealing, as well as familiar (yoga, steak, gummy vitamins) the easiest to relate to.  But they are not anywhere near the top row in the decision process, a reversal that puts them top of mind while co-pays, major surgery, home nursing care, therapies, screenings, and lab tests are far more costly and important.  Reversing the hierarchy is an example of a clarifying technique in framing this decision.

In fact the entire Medicare process is based on emotional appeals: opening with reassurance about medical systems’ “caring,” along with saving money, discounts, free stuff, glamorous retiree shots, and confidence in agents who sound smart.  They sound especially smart because they are dealing in technical domains – medical and technological—where patients have limited experience and knowledge.  So patients are going to feel undereducated, which they can’t help.  It adds to the attraction of leaning on the expertise of the seller while undervaluing one’s own ability to make sound decisions. 

But the outcome is high-stakes and high price, and will determine whether and how much quality healthcare is going to turn out to be affordable.  Not that different from buying a luxury car with hundreds of features and not knowing how they work or whether they are even needed or desirable, nor whether they could increase driving insurance rates or repairs.  The emotional hook of “luxury medical goods” must be pointed out and examined more closely so they can be overridden by a more rational computation.  It can almost seem that Medicare is designed to be confusing and unclear—it would be hard to think of a system of decisions that is more so. (See “Do You Know Your Medicare Number?  Try Memorizing This,” the February 2021 blog on the complexity of the Medicare alpha-numeric member ID making it highly difficult to memorize.)