Seniors ponder options for Medicare coverage

September 19, 1995|By John B. O'Donnell | John B. O'Donnell,SUN NATIONAL STAFF

WASHINGTON -- Hedwig Groetsch is cautiously making her way over bewildering new health-care terrain, tantalized by a promise of lower medical bills but reluctant to take the big step necessary to get those savings.

The 78-year-old Catonsville widow is trying to decide whether to jump onto the managed-care bandwagon. She would have to give up her freedom to visit any doctor she chooses as often as she likes. In return, she would enjoy broader coverage than she now gets in traditional Medicare -- and pay less for it.

"I really would like to change, but I'm skeptical," she says.

Her quandary is one that many of the 37 million Medicare recipients could have to face once Congress reshapes the program that pays nearly half their medical bills but costs taxpayers dearly -- about $161 billion this year alone.

As they reduce projected Medicare spending by $270 billion -- nearly 16 percent -- over seven years, Republicans promise that seniors will not be forced to give up the health-care system they are most familiar with -- known as fee-for-service.

They insist that retirees who forsake tradition to embrace managed care will be rewarded with more money in their pockets. But there are trade-offs.

In managed care, which takes a number of forms, including health maintenance organizations, Medicare recipients like Mrs. Groetsch may use only doctors approved by the plan. And a primary-care physician must authorize all visits to other doctors and hospitals and all medical procedures. Otherwise, the plan won't pay the bill.

Most managed-care firms are for-profit. They collect a fee from the government for each Medicare enrollee. If the cost of caring for the person exceeds that fee, the plan takes a financial hit. If the cost is less, the company profits, up to a limit, and puts the rest of the savings into benefits.

Medicare recipients in managed care must still pay the government a premium for physician services, which is $46.10 ++ this year. Some managed care companies also charge an added premium.

In promoting managed care, Republicans are following the lead of American employers. Convinced that they will save themselves money, companies that pay employees' health-care costs have channeled nearly two-thirds of their workers into managed care.

Maryland is behind

Medicare lags far behind, with only 10 percent of its recipients in managed care. But retirees are beginning to discover the potential savings. Medicare enrollment in managed care is growing by 70,000 to 75,000 people a month, according to the Health Care Financing Administration, which runs Medicare.

Maryland is behind the curve, with only 2 percent of Medicare recipients enrolled in managed care.

For congressional Republicans, the stakes are high. The savings they anticipate from moving many of the elderly into managed care are crucial to redeeming the party's pledge to balance the budget by 2002 -- and, Democrats say, to give a $245 billion tax cut to wealthier Americans.

Doctors, hospitals and other health-care providers also have a big stake. Should the drive toward greater use of managed care falter -- or should anticipated savings fall short -- payments to providers could be severely cut. Republicans say they would make up the difference by reducing payments to providers. And that could affect recipients, because some doctors may then refuse to treat Medicare patients.

At the same time, managed care could succeed all too well, in the view of some, by reducing use of doctors and hospitals in what some say amounts to rationing.

Chesapeake Health Plan of Baltimore is one of seven companies authorized by the Health Care Financing Administration to offer managed care to Medicare recipients in Maryland. Like other approved firms, Chesapeake must accept all applicants regardless of their health status. There are two exceptions: people who have had a kidney transplant within 36 months and those on kidney dialysis.

Chesapeake recently invited the perplexed Mrs. Groetsch to a recruiting meeting in Woodlawn. The pitch was straightforward, offering greater coverage than she gets now and promising to cut her expenses.

The savings -- from dropping her supplemental insurance and lower out-of-pocket payments for services -- would be hundreds of dollars a year when she is healthy and thousands more in case of an illness that requires long hospitalization.

"It sounds too good to be true," she said, still wary after the hourlong session. But she was tempted enough to explore the offer -- and to decide to attend a second meeting today.

Quick decision to join

It didn't take her friend Tina Ringenary of Ellicott City long to decide. Soon after the meeting, Mrs. Ringenary signed up, expecting to save thousands of dollars.

The government will pay Chesapeake $550.13 a month for Mrs. Ringenary and the same for her husband, Francis, and won't charge additional premiums.

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