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If you want to better understand one of the major issues facing the US healthcare system, watch your TV and mail each Fall. In a word choice. No wonder people are confused when they are on Medicare.
Why should we need companies whose purpose is to help seniors make choices and why should new choices be encouraged each year? Why is insurance for healthcare bills that complicated and confusing?
Nobody can accurately assess the risk they face from health care costs, they typically over estimate that risk. They surely can’t predict prescriptions they may take in the coming year. They don’t balance the coverage and probable out of pocket costs with the premiums, often wasting money.
Choice may be fine with investments, not when it comes to health insurance. There are too many variables and the very insurance concept of pooled risk is at risk because of adverse selection, in part when people think they should only buy insurance when they need it.
Medicare Advantage was a nod to the insurance industry. The Medicare Payment Advisory Commission (MedPAC), the independent congressional agency that advises Congress on Medicare payment policy, consistently finds that federal payments to MA plans exceed what Medicare would spend if the same beneficiaries were in traditional Medicare. For 2026, MedPAC estimates payments are about 14% higher, or roughly $76 billion more – partly because of adverse selection and partly from diagnosis coding games.
This confusion and cost shifting is not unique to seniors. Employers are increasingly shifting costs to workers in the form of higher OOP costs and higher premium sharing.
Why are Americans unable to grasp the advantage of one large insurance risk pool for every American? Everyone in the pool!
