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California tried to fix a major Medicare loophole for seniors


This year, some California lawmakers tried to fix a major problem in Medicare coverage for seniors. They sponsored a bill to allow seniors more flexibility in choosing doctors and hospitals after they've already enrolled in a Medicare plan. Kate Wolffe at CapRadio in Sacramento explains why this hidden issue raises questions about affordability and the cloud of insurance companies.

KATE WOLFFE, BYLINE: Traditional Medicare isn't much use without a supplemental plan. Most often, people choose Medigap, a plan provided by a private insurer that fills the gaps in the coverage. Because most doctors take traditional Medicare, with this combination, you can see anyone. The world's your medical oyster. The other path for seniors is Medicare Advantage. These plans are run by private companies and can offer extra benefits and lower premiums.


UNIDENTIFIED PERSON: Why do so many seniors choose Medicare Advantage? Maybe because with age comes wisdom. Medicare Advantage - leading the way.

WOLFFE: They offer a far narrower range of doctors and hospitals. Even still, once seniors become eligible for Medicare, over half of them turn to a Medicare Advantage plan. Tricia Neuman is with KFF, a health policy think tank.

TRICIA NEUMAN: The plans are marketing aggressively and offer extra benefits.

WOLFFE: Neuman says people might pick the lower-cost Medicare Advantage when they're healthy. But if they later get very sick, they can find themselves trapped in a network with fewer options and higher out-of-pocket costs. But if they want to switch back to traditional Medicare, they'll likely also need a Medigap policy.

NEUMAN: People in those circumstances might find themselves in a bind if they can't purchase a Medigap policy. And often they find out too late.

WOLFFE: That's because after the first six months of being on Medicare, it can be very difficult to get a Medigap policy.

NEUMAN: People can be denied a policy because they have a preexisting condition, or they can be charged more, or they can get the policy, but not for the particular condition that will require medical attention.

WOLFFE: The Affordable Care Act prohibited insurance from factoring in pre-existing conditions, but that didn't apply to Medigap. A bill that would have changed that was introduced in the California Legislature this year. It would have created an open enrollment period for Medigap every year so seniors could opt in or out each year and not be denied or get charged exorbitant premiums due to pre-existing conditions. Adam Zarin is with the Leukemia and Lymphoma Society, a major backer of the Medigap bill.

ADAM ZARIN: Cancer or any chronic illness is very, very expensive, and so that's why having supplemental coverage is important. I think the second part is about making sure that patients have access to the best health care available.

WOLFFE: Zarin says leukemia and other blood cancers most often impact people who are aging - after they're 55. That was the case for Oakland resident Judith Dambowic. She was 58 and working as a physical therapist, when she found out her swollen and painful eye was from multiple myloma. Ten years after that diagnosis, she's become invested in the effort to change Medigap.

JUDITH DAMBOWIC: It's the options. It's the choice that matters.

WOLFFE: Dambowic has a Medicare Advantage plan, and she's OK with it. But with her cancer, traditional treatment options often stop working.

DAMBOWIC: I still have some left of the traditional. But then I'll need to make choices.

WOLFFE: She's worried her limited Advantage plan won't let her access the most innovative treatments.

DAMBOWIC: These slots are highly coveted, and it's very hard to get in from an Advantage plan. And the Advantage plans aren't really running these cutting-edge clinical trials.

WOLFFE: She feels stuck. Her pre-existing condition, the cancer for which she needs treatment, would be cause for a Medigap plan to deny her coverage. Four states have already reformed Medigap in the '90s - Connecticut, Maine, Massachusetts and New York. As the bill was being debated in California, Steffanie Watkins spoke to lawmakers on behalf of the insurance lobby. She said, if more sick Californians are on Medigap plans, insurance companies will have to raise rates for everyone.


STEFFANIE WATKINS: We are concerned with the potential devastating impacts this bill could have on the 1.1 million seniors who by no fault of their own would experience significant rate increases if this bill were to pass.

WOLFFE: A state budget analysis found the average Medigap premium would increase by 33%, about $80 a month. Tricia Neuman, with KFF, says it's a valid concern.

NEUMAN: Where people with modest incomes, people at the sort of lower end of the income scale who have Medigap, they might feel priced out of the market.

WOLFFE: In the end, the bill failed. Zarin said legislators sided with the insurance companies, but his group will keep pushing for this reform. For patient Judith Dambowic, she says all she can do is educate friends and other cancer patients about their Medicare options, so they know what they're signing up for from the start and how difficult it might be to change.

For NPR News, I'm Kate Wolffe in Sacramento.

SIMON: And that story comes from NPR's partnership with CapRadio and KFF Health News. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Kate Wolffe