Is Medicare Getting Too Complicated?

If you're over 65, there's a good chance you find your Medicare coverage confusing. In a recent survey by the National Council on Aging, only half of seniors said that they understand how it works.

The survey found large gaps in knowledge about Medicare's basic structure. Only 36% of seniors correctly identified the component that covers hospital care, and only 26% could name the component that pays physicians. (The answers are Part A and Part B respectively.) Two-thirds had no idea what Part C is for. (It lets you choose alternative coverage through a private managed care plan.)

Those approaching age 65 reported even more confusion about Medicare and displayed even less knowledge. Only 46% of those between the ages of 60 and 64 said they understand the program, and they were less likely than the seniors to correctly identify its components.

Much of the time, this confusion doesn't really matter. Seniors get health care, and the government pays the bills. They don't have to know the details of how the payments are made.

And most people who have private health insurance are confused about how it works. Why should Medicare be any simpler?

The problem is that Medicare involves an increasing array of choices, and they are the hardest aspect of it to understand.

Take the drug benefit. When you first enroll in Medicare, you have to pick a private plan to cover your prescriptions. The coverage can be complicated, with a large gap, known as the "doughnut hole", after you run up about $2,800 in expenses each year. In the survey, 44% of seniors were unfamiliar with the coverage gap. And only 28% were aware that it is shrinking under the new health reform law.

An even tougher challenge is deciding whether to opt out of direct government benefits and get all your coverage through a private plan under Part C. Only 9% knew the correct date to begin enrolling in those plans. And only 13% of those who are eligible for financial assistance with Part C had ever applied for it. Overall, 39% said that their understanding of Medicare options was only fair or poor.

And Part C includes dozens of plans to choose from in most regions. Harvard Medical School researchers found that seniors can be overwhelmed by the number of options and often make poor decisions as a result.

Medicare is steadily becoming more complicated. As it does, seniors face greater challenges in navigating the system and figuring out what is best for them. And imagine the difficulty for those whose cognitive abilities have begun to decline.

So, is choice in Medicare a bad thing?

Medicare will always be complicated because health care is so complex. But policy makers and administrators should be the ones dealing with the complexity – not elderly patients.

Some Medicare reform proposals would eliminate direct government coverage entirely and require all beneficiaries to choose from an assortment of private plans. The complexity in this approach could leave many beneficiaries seriously confused.

Some choice is good. But for Medicare coverage, we are learning that it is easy to have too much of a good thing.

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