You are trying to build a strawman. You stated that Medicare Advantage would cost YOU $2000 in skim - that you would pay an extra $2000 a year over what you actually pay for Medigap. That is false. You did not make a comment as to which was the better insurance for the money/coverage.
The insurance that offers me the lowest lifetime cost after premiums and deductibles paid is the better insurance for the money/coverage. You’re healthy until you’re not. I have no way to predict my individual medical costs over the next 30 years, just as I have no way to predict the exact performance of the S&P 500 over the next 30 years. But I do know that an S&P 500 index fund with a much lower expense ratio is going to leave me with more money in my pocket at the end of 30 years. Just like I’m likely to get much better medical care from a health plan that just pays for what my doctor orders, than one that’s diverting a sizeable amount of my benefit to skim and fighting me for every procedure my doctor orders.
Here’s a paper by a couple of economists on how the average person chooses a health plan. It’s not pretty.
intercst
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Maybe this is a better way to explain what I’m talking about?
Medicare Advantage has an “expense ratio” of 15% or $2,025 out of my $13,500 annual Medicare “actuarial value”.
I’m going with traditional Medicare and its 1.5% “expense ratio” (i.e. $203 skim out of the $13,500 actuarial value) plus a Medigap plan with $524 annual premium and a 20% skim rate ($105/yr skim) and a Part D drug plan with a $19.20 annual premium and a 15% skim rate to the insurer ($3/year).
So the health plan I chose has a total of $203+105+$3 = $311/year skimmed off in admin costs versus $2,025/year in Medicare Advantage. And I have much better insurance where I don’t have to call the insurance company for permission to do something.
“Minimizing the Skim” – the key to Retiring Early.
intercst
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Someone mentioned GoodRX app for good prices on prescription medications. I also use the Singlecare App which is good for price shopping prescription prices in your local area…doc
SingleCare: The Best Prescription Prices, Discounts & Coupons
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I haven’t used Singlecare before and I checked their price vs. GoodRx on the prescription I filled last week: Singlecare = $429, GoodRX = $353. Of course, there may be drugs where Singlecare is cheaper, I don’t know. But it points out that for everything in healthcare, make sure you get multiple price quotes if you’re not in a coma and able. You need to approach this like you’re dealing with a car dealer or a home improvement contractor. Lots of opportunities for the health care/health insurance industry to price gouge you.
intercst
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Singlecare is more of an app for finding the cheapest price on a medication in your area. Thats what I use if for anyways…doc
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Interesting. I just checked my prescriptions at GoodRX. For the moment, my Covered California plan gives me a better price out of my pocket. I’ll definitely revisit this in the next couple of years, as Medicare is less than 3 years away for me.
But I did notice that the prices dropped a lot as I went from 30 days to 90 days to 180 days. And by a lot I mean that one went from $11 for 30 pills to $21 for 180 pills. It would appear that the medications themselves cost next to nothing. You’re mainly paying for the cost of the pharmacist to actually fill the prescription. Of course, these were for some pretty common generics.
–Peter
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