GAO: Private Medicare plans can cost beneficiaries more than government-run program

According to a new Government Accountability Office (GAO) report, private Medicare plans often cost beneficiaries more than the traditional government-run Medicare program. (Source: "Private Medicare Plans' Cost Questioned, Feb. 28, 2008, NY Times.) "About one-fifth of the 44 million Medicare beneficiaries--9 million people--are in private plans, known as Medicare Advantage plans. (According to the new report), Medicare spends more per beneficiary in Medicare Advantage than it does for beneficiaries in the original Medicare fee-for-service program, at an estimated additional cost to Medicare of $54 billion from 2009 through 2012." While Bush administration officials and insurance executives say Medicare Advantage plans offer cost savings and added benefits to beneficiaries, the GAO found that "certain costs are not counted toward the out-of-pocket limits established by some insurers. Thus, it said, among Medicare plans with out-of-pocket limits, 29% exclude the cost of some cancer drugs, 23% exclude the cost of some mental health services and 21% exclude home health care expenses." This means beneficiaries who use these excluded services "may pay more in total cost-sharing than is indicated by the plan's out-of-pocket maximum."