Senate Budgeters Target Medicare Plan

WASHINGTON -- When Doug Morris joined Medicare last spring, the retired college professor went right to work reading the handbook that explained his benefits, expenses and rights. All 107 excruciating pages.

Using the analytical approach from his academic career, he chose a private insurance plan over traditional Medicare. He liked the extra benefits in the private plan, including a free annual physical and eye exam.

Increasingly, older and disabled people are making the same decision. Yet in the months ahead, these Medicare Advantage programs could become less attractive. Congress will consider lowering payments to the insurers. If that happens, insurers could respond by cutting benefits.

Members of Congress seem particularly focused on a program under Medicare called private-fee-for-service. The government spends substantially more for the people in these plans than it does for patients in traditional Medicare.

"All provider payments must be reviewed and are subject to change," Democratic Rep. Pete Stark of California, head of the House Ways and Means subcommittee on health, said last week. "They're at the top of my list."

That is the kind of plan that Morris joined. These plans allow members to go to any doctor, hospital or other provider that has accepted the plan's terms. In other types of managed care, patients can see only doctors in their plan's network, and they pay more if they go outside.

Morris, who lives in Middleton, Wis., says the plan gives him peace of mind. If he has a heart attack or other major illness, Morris has a $3,950 cap for his out-of-pocket expenses for the year. By comparison, the traditional program doesn't have a limit on out-of-pocket costs, unless the beneficiary also bought a supplemental insurance policy.

"These Medicare Advantage plans are exploding in popularity because they're good," said Morris, who taught music theory and music history at Ripon College.

In Medicare Advantage, the government pays insurers a set amount per beneficiary. The insurer then reimburses doctors and other providers for treating plan members. Overall, Medicare covers about 43 million people; about 18 percent are in managed care plans.

The plans are heavily subsidized by the government; last year, they received $56 billion. In exchange, they assume the risks and costs of covering people's health needs.

The fee-for-service plans are, by far, the fastest growing of the four types of managed care offerings under Medicare. Enrollment in such plans surged from 210,000 in December 2005 to 1.35 million in January.

There is a reason the plans are popular.