2003-10-24 -- Medicare HMO Costs keep Rising,
 Kaiser Reduces Rx Benefits, Increases Rates and Copays

Contra Costa Times: Medicare HMO costs keep rising.  Kaiser and Health
Net increases in hospitalization and drug charges add the highest
extra costs to the sickest patients.

This is what Democrats and Republicans alike are willing (or eager) to
force seniors onto in their phony prescription plan.


CONTRA COSTA TIMES, Fri, Oct. 24, 2003
http://www.bayarea.com/mld/cctimes/7093876.htm

HMO costs for elderly keep rising

For seniors, there are no longer easy choices when it comes to health
care.

HMOs once offered a cost-effective way to boost the minimal benefits
of traditional Medicare. But they've become less and less of a good
deal over the past few years. As medical expenses have ballooned, so
too have the costs of these plans for the elderly.

That trend will continue in 2004. Hospital co-payments for the HMO
plans -- known as Medicare+Choice -- will increase for many seniors.
In addition, now only one of four plans in Contra Costa and Alameda
counties will cover brand-name prescription drugs.

"It's not as easy as it used to be," said Janet Van Deusen, program
manager for the Health Insurance Counseling and Advocacy Program in
Alameda County, which is funded by the state. "When seniors didn't
have to pay a premium, hospital and ambulance co-pays didn't exist --
'it sounds too good to be true' was the main response we got from
people. And it turns out that it was."

Medicare+Choice plans used to offer rich benefit packages for low
premiums. Important to many seniors, the plans had prescription drug
benefits, something not offered by traditional Medicare. Hospital
stays were free and co-payments for doctor visits were nominal,
compared with the 20 percent co-insurance charged by Medicare.

But starting in 1999, low federal reimbursement rates and sharply
escalating health care costs led health plans to withdraw from less
profitable geographic regions. The HMOs that remained raised premiums
and co-payments, introduced hospital deductibles and reduced drug
benefits.

For 2004, there will be no radical changes to the Medicare+Choice
plans. The basic rate for Medicare, paid by all enrollees, will
increase to $66 from $58.70. HMO premiums will stay about the same and
co-payments for doctor visits will not go up.

However, several changes detailed this week on Medicare's Web site,
www.medicare.gov, may greatly impact some seniors.

Kaiser Permanente's Senior Advantage and Health Net of California's
Seniority Plus will alter hospital co-payments, switching from an
admission fee to a daily charge. The change could quickly amount to
higher out-of-pocket costs for the sickest patients, Van Deusen said.

In 2004, Kaiser patients will pay $200 for each day in the hospital up
to a maximum of $3,000 for total medical expenses. This compares with
$500 per hospital admission and a maximum of $2,500 for out-of-pocket
costs in 2003. It's also potentially more than traditional Medicare,
which costs $876 per 60-day hospital stay.

Health Net members will pay $175 for up to eight consecutive days in
the hospital and will have to pay again if 60 days pass between
hospital visits. In 2003, Health Net members paid $700 per hospital
admission, paying again once 60 days had passed. In addition,
co-payments for outpatient surgery will increase from $100 to $175 in
2004.

Kaiser's prescription drug coverage will also change. The HMO will
drop all payments for brand name drugs. In 2003, Kaiser paid $1,000
per year for brand name and generic prescriptions, offering some
relief for brand-name drugs that can cost hundreds of dollars each
month. In 2004, Kaiser will pay only for generics, but it eliminated
the $1,000 cap.

That leaves only Contra Costa Health Plan with a brand name drug
benefit. As in 2003, the plan will pay $1,000 toward generic and brand
name prescriptions.

Medicare+Choice benefits are decreasing because federal reimbursement
rates simply aren't keeping up with medical inflation, said Denise
Hanson, director of Medicare and state programs for Kaiser Permanente
California regions. "We had to find the dollars to cut out of the
program somewhere," she said.

The accumulated changes leave Medicare+Choice plans only marginally
better than those of traditional Medicare.

Premiums are still cheaper than Medigap plans, insurance that
supplements Medicare. But for some seniors, paying Medigap's expensive
premiums can prove cheaper in the long run because it covers more.

Van Deusen gave an example of one client who might benefit from a
Medigap plan. His HMO covered only 80 percent of an expensive
injectable drug received on a weekly basis. His out-of-pocket bills
added up to about $2,000 a month.

Medigap H, on the other hand, costs $140 to $660, depending on a
person's age and where they live. But Medigap would cover the entire
cost of his injectable drug, and there's no co-payment for doctor's
visits and hospital admissions.

One serious flaw is that Medigap insurers can refuse to cover anyone
with a pre-existing condition. "There just aren't any easy answers any
more," Van Deusen said.