Winston

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Winston:

I heard about you guys putting together a series of podcasts about healthcare - I worked as a contractor call center agent for a major insurance company ( Working with 65+ Medicare patients, mostly), and later on, I worked in legal marketing for a firm that worked with Social Security cases. I've got some anecdotes about both - honestly, what I've seen is pretty grim. I've had to tell the elderly about the plans they had with their insurer - many times they had no clue what they had agreed to. I've had to tell people that their drugs wouldn't be covered for a large part of the calendar year, but after they spent thousands, they'd get coverage for a few months until the cycle started over again ( the Medicare "donut hole"). I can point out forums where people ask unqualified marketing specialists for help with getting their family members on Medicaid. I've seen people ask how a divorce would aid their ability to get Medicaid for their kids. I've had to tell many people that I cannot help them.

Ashes Ashes:

Could you elaborate on the donut hole? How common is it for people to find themselves in that situation, and are there any particularly common medicines/conditions associated with it? This sounds like a really illuminating example of how expensive and unattainable quality healthcare can be even for people with insurance.

Also, the divorce example is heartbreaking but an unfortunate reality of the American healthcare system: time and again, people are forced to make the difficult personal choice of either sacrificing their financial, mental, family health, or their physical health. Do you have any other examples of these difficult choices people face?

Winston:

1) Social Security Retirement Benefits ( and SSDI, which are the same benefits for people who become disabled and qualify for the program through work credits, who also go through the two-year!

waiting period for Medicare benefits) in the US include monthly payments to the beneficiary and coverage under Medicare. Medicare itself provides two types of coverage - A and B. Part A is hospital insurance - this includes care in a hospital, hospice, or in some cases, home care. Part B covers things like x-rays, doctor's visits, lab work, etc. This is where private insurance comes in. Private insurance provides Medicare Advantage plans, which cover things that are grouped under Parts C &D of Medicare. Part C is also called Medicare Advantage, and it covers things that aren't covered normally by Medicare (dental, eyecare, ect), and is administered by private companies, who then receive the retiree's ( or SSDI beneficiary's) monthly Medicare premium. Standard Medicare isn't free, and it costs between 134 and 267 dollars, depending on your income in retirement ( or SSDI-eligible disability). Generally the Medicare Advantage (Part C) plans have a tiered pricing model, with one free tier for Medicare-eligible patients, along with two other tiers costing additional money each, with additional coverage. Seniors invariably want this type of coverage because they know keeping healthly will be increasingly costly anyway, but they don't know they're automatically enrolled in Medicare, so insurers have salesmen cold-call them and pitch them on the additional tiers of coverage when they become eligible to enroll or when they can switch plans. I called people to explain their benefits as part of government standards compliance. Many thought they had just signed up for standard Medicare, even though they're automatically enrolled in Medicare once they become eligible. All of these Medicare Advantage Plans also cover Part D, which is drug coverage.

So, beyond that short primer on Medicare overall and the role of private insurance companies in it, here's what's up with the "donut hole":

Medicare Part D (Drug Coverage) is a staged system, and these stages are:

Deductible Stage: This is where you pay the full cost of drugs, up to the deductible limit. The deductible limit is about $405 in 2018 (415$ in 2019).

Initial Coverage Stage: Medicare beneficiaries pay the copays for their drugs, and this stage lasts until the combined costs of drugs reaches about $3700 ( What you pay, and what insurance pays in total).

"Donut Hole" Stage: This is where quite a few people get screwed. During this stage, beneficiaries pay a percentage of a drug's cost. In 2018 it's 35% for brand names and 44% for generics (25% for both in 2019).This continues until you hit a limit of $5000 spent out of pocket.

The Donut Hole disadvantages buying generic drugs, as 85% of the branded drug price gets counted as part of out of pocket costs (while you pay 35%), whereas with generics only the price that you have paid is counted. Meaning that if you have a branded drug that costs say, $1000 a month, and you're already at the initial coverage limit at the end of Jan 1 due to needing multiple drugs, you'd reach the donut hole limit in about 6 months, and you'd pay about $2100 of that $5000. If you've got a generic drug that costs $500, you'd pay $220 of that and you'd hit the limit in...22 months. However since these limits are yearly, you'd pay about $2420 for your drugs at this rate. This problem is compounded if someone is prescribed multiple generic drugs, which is likely for many older people with multiple conditions.

Insurance companies have lists of covered drugs called formularies (example pdf), and many of the drugs are only usually covered in generic forms, like sildenafil (Revatio, used for hypertension, and also the active drug in Viagra in larger doses, which is not covered under Part D plans), duloxetine (Cymbalta, depression, anxiety disorders), among other really common medications. So if you're hypertensive and depressed about it, you're screwed.

This might not seem too severe on its own, because there are limits and protections for Medicare beneficiaries. However when you look at it in the larger context of retirement benefits and retirement in general in the US, this takes a staggering chunk out of people's benefits - the maximum benefit amount for retirement benefits is about 32 grand a year. This is based on what you've paid into Social Security over your lifetime, and you'd only get this is you hit the Social Security income tax limit for every year that you've worked (it's $127K in 2018). The average benefit is about $1400 a month, so people usually get somewhere around 16 grand a year in retirement benefits. So when you add up all the costs of these healthcare plans and the maximum associated drug costs:

Monthly Medicare premiums (base): $134 x 12 = $1608 approximate drug spend (deductible and donut hole) : $5400 Medicare Advantage Plan (average across all plan types) : $64 x 12 = 768 Total : $7776

This leaves less than 10 grand for other expenses, and this isn't counting copays or other medical costs. 40% of Gen-X and Baby Boomers do not have anything saved for retirement. It's going to be an even bigger problem than it is now.

2) While I was in the legal marketing industry, I helped answer people's questions about disability benefits for a site in order to convince people to get legal representation for their SSDI cases. You can claim benefits if you get disabled and meet work credit requirements, but it often requires going before a judge. Quite a lot of these questions were from parents asking how they would be able to get their children on Medicaid because they couldn't afford the costs associated with caring for their child's condition. The income limits and requirements vary by state, but generally, you're eligible if your child is determined to have less than $750 a month in income,( based off of a portion of the parent's/guardian's income) and have less than $2000 in assets, not counting your home. You're only able to own one car ( having more than one is disqualifying, even if its value wouldn't put you over the asset limit). So for a low-income family that owns two cars and needs each of them for two parents to get to work, they have to get rid of one car. It significantly reduces the ability to earn income in places without reliable public transit, which is a large majority of the US. Additionally, because there are income limits, it significantly reduces the ability of parents to earn more money - if they earn more money and become ineligible for benefits, their child is not covered, but it's too expensive to get private insurance in many cases. There's also mountains of record-keeping, office visits, medical record audits, and other various tasks that seem designed to sap the life out of the people trying to get help for themselves or their immediate family.

Overall the disability benefits system is pretty byzantine, and I could go on at length about it by itself.

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