However, experts say the change isn't enough to fix an ailing system.
The Bush Administration recently announced the start of a program that would add a preferred provider organization (PPO) option to Medicare plus Choice. PPOs are similar to HMOs, but are generally not as restrictive. What most people like about PPOs is that you can see any doctor you like; you just have to pay more if you go to an out-of-plan physician.
"What the administration is trying to do is increase options for Medicare beneficiaries," says Bob Meehan, vice president of consumer and commercial markets for Horizon Blue Cross Blue Shield of New Jersey. "But it's not a solution to the overall funding problems [with Medicare plus Choice]."
The new PPO option will be offered by 33 health insurance plans to about 30 percent of all Medicare recipients. Seniors in selected counties in Alabama, Arizona, California, Florida, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maryland, Missouri, North Carolina, Nevada, New Jersey, New York, Ohio, Oregon, Pennsylvania, Rhode Island, Tennessee, Virginia, West Virginia and Washington can begin enrolling in late October or November.
While each health plan will offer different benefits for different fees, Meehan says his company, which offers coverage to all of New Jersey, will have two PPO options. One will probably cost just over $100 per month and will include a limited prescription drug benefit, and the other will be around $85 each month, but won't cover drugs.
Jennifer Bryant, a senior consultant with the Blue Cross Blue Shield Association, says the Bush administration is trying to nudge PPOs into the Medicare plus Choice program by offering new ways of reimbursing them for services. She says the Medicare plus Choice program was originally created in 1997 and, for the first time, let seniors choose a private HMO to provide their Medicare benefits. It was a boon to seniors, letting them get prescription drugs and reduced medical expenses for no additional fees as long as they abided by the HMO rules.
However, many health plans found they couldn't afford to provide the service because Medicare plus Choice payments were only rising 2 percent a year, while health-care costs have been going up around 8 percent a year, Bryant says. Many insurers have pulled out of Medicare plus Choice; others have started charging premiums or paring back benefits significantly.
Under the new program, PPOs will be able to select one of two reimbursement options.
"It's a step in the right direction," says Bryant, who adds she is still worried about the long-term future of the Medicare plus Choice program.
James Walsh, editor of Hassle-Free Health Coverage: How To Buy The Right Medical Insurance Cheaply and Effectively, also worries about the Medicare plus Choice program. The current changes, he says, don't go far enough.
"It's like changing the deck chairs around on the Titanic," he says. "These changes don't solve the basic problem of a cost-control system."
Medicare plus Choice, like other PPOs and HMOs, is a good option for people who are healthy, according to Walsh. It's not so good for people with chronic illnesses and those who require a lot of medical care. The system, he says, is set up with limited resources, and cost savings can only come from taking services away.
"It's brutal Darwinism. If you're relatively healthy, it can be a good system for you. If you are not well, think hard about enrolling in Medicare plus Choice," Walsh advises.
He recommends that anyone who is ill purchase Medigap insurance instead, which is often more expensive, but is much less restrictive.
The government also announced changes to the way it reimburses Medicare Select providers. Medicare Select is a supplemental insurance plan that generally offers Medicare recipients additional benefits if they use participating doctors and hospitals. The changes are expected to encourage more providers to join the plan.
What To Do
If you'd like to know more about Medicare plus Choice, go right to the source. Here's the Medicare Web site. If you'd like to learn more about which insurance might be right for you, check out this information from AARP.