When New York public employee retirees won the right to avoid forced Medicare Advantage enrollment recently, it was a triumph in the continued struggle over whether older Americans should be able to choose traditional Medicare or instead be forced into the privatized version of the insurance program for older and disabled Americana, called Medicare Advantage.
The public employee retirees had been in a legal struggle with the Mayor Eric Adams of New York City, and with their own union, over Adams’s insistence that he would force retirees into the privatized version, though their contract guaranteed traditional Medicare.
The retirees won a series of court cases to avert the forced transfer, then lost a case with New York’s highest court. But in a complete surprise, two days after the employees lost their high court case, Adams relented and said the employees could keep their traditional Medicare plans, avoiding the privatized one if they want. Adams is in a tough re-election campaign, and political observers said he might have flipflopped to gain the employees’ support. About 250,000 public employee retirees would have been affected.
Why is this important? It’s clear from events in Washington that the Trump Administration is enthusiastic about privatizing just about everything. In fact the Project 2025 blueprint for the federal government includes the idea that Medicare Advantage should be the default for everybody, heralding an attempt to eradicate traditional Medicare — right there on Page 497.
Medicare Advantage has a much higher rate of denials of care via prior authorization. Medicare Advantage plans typically also have smaller networks, sometimes much smaller. They often have a lower premium, even $0, and can offer some additional benefits like dentistry, vision and so on, but those additional benefits are typically small.
What happens is that people sign up for Medicare Advantage with the inducement of the zero premium and the additional services, and then realize what’s happened, and can’t get out into traditional Medicare with its broader availability of care. Or they find Medicare Advantage perfectly acceptable as long as they are healthy, but then when they find care is being denied and try to switch to traditional Medicare, they encounter roadblocks.
No switching back
Only four states — New York, Maine, Connecticut and Massachusetts — allow Medicare Advantage enrollees to switch back to traditional Medicare, and to buy a supplemental Medigap plan, without penalty. In other states they either can’t switch back, or they have to pay a penalty to switch back to traditional Medicare with a supplement.
This typically becomes an issue for somebody who signed up for Medicare Advantage thinking it’s fine, and then realizes that they need more care, they don’t like the prior authorization and they want a bigger network, and they want to switch to traditional Medicare, but they can’t get out.
The avenue of traditional Medicare with a supplement — Plan G or Plan F, primarily — and a Part D drug plan, is typically more expensive than Medicare Advantage. This often means that low-income retirees are using Medicare Advantage because they cannot afford Plan G and Plan D premiums. (Read our Medicare overview here.)
Marianne Pizzitola, a retired Fire Department of New York employee, heads the NYC Organization of Public Service Employees, which led the fight to preserve traditional Medicare and the retiree health plan, which was in the union contract that the Adams administration was trying to scrap.
“I have a retiree in Florida, a retired firefighter under 65 with end-stage kidney disease,” she said in a Zoom interview. “His doctor and hospital don’t accept M.A. He was in the middle of a transplant, and they told him, ‘If you end up forced on this plan, we will not do this surgery and we will not treat you. You will need to either change your insurance or find another doctor or hospital.’”
He went looking for a Medicare supplement in Florida for an under-65 male with a wife and family, because the benefits would end not just for him but also for the entire family, she said, meaning he would have to buy on the marketplace.
“The supplement for the city cost the city 200 bucks a month,” she said. “This man was being quoted by AARP United Healthcare supplement, $800 a month. He could never have afforded that, and then he would have also had to purchase healthcare for his wife and child, and then a drug plan for them.
“It’s prohibitive. He didn’t make that kind of money.”
Continuing care conundrum
She also told of retirees who live in continuing care residential communities (C.C.R.C.’s). This is often a path for a retiree who wants to be assured a continuum of care, she said, or a retiree who does not want to burden children with their care. The resident pays a fee like a homeowners association fee for the place to live and a meal plan.
“There’s a medical director there that takes care of you,” she said. ”If you get hurt, you get sick, you fall, whatever, that medical director makes all of those decisions. When you sign those agreements, you sign in the lease that you will not switch out of your traditional Medicare or go into an H.M.O., because the medical director can’t be fighting with an insurance company for medical necessity and prior authorization. Retirees in these C.C.R.C.’s were frustrated because they were trying to negotiate with with Aetna,” which was to have been the insurer, she said.
“Aetna was like, ‘Don’t worry, we’ll work with you,'” she said, but emphasized that this was not anything like a contractual commitment.
In this period, she said, one of her retirees in a community in Florida told of walking into the cafeteria and seeing a woman crying. She asked if she could help. The woman said her mother lived in the community, and fell out of bed and broke her hip. After a hospital stay, the hospital wanted to send her to skilled nursing, but Aetna Medicare Advantage denied the stay, and the administrator then called the woman to come care for her mother – leaving her husband and child in Texas.
Some retirees, though, like their Medicare Advantage plans. A New York City lawyer told me he loves his — all his New York University doctors take it, and the premium is low. He also does not have many health issues, and — this is important — he lives in New York, where he can switch to traditional Medicare and buy a Medigap supplement easily, with no penalty.
Low-income New York public service retirees also depend on Medicare Advantage because they can’t afford Part G and Part D premiums. Plus, some Advantage plans offer transportation benefits, gym memberships, perhaps dental and vision, though those are typically minimal. Some plans offer a cash or gift card of $65 or $200 a month, depending on the plan. Pizzitola pointed out that for a retiree living on $24,000 a year, $65 a month can be a big deal.
While Pizzitola’s group won its battle, she said they continue to press for legislation in the New York State Assembly and the New York City Council to forbid any similar actions in the future.
The default option
The debate over Medicare Advantage and the union’s successful struggle points directly to one stated goal of Project 2025, the blueprint for U.S. policy under the Trump administration that was put together by the Heritage Foundation.
Currently, if a person turns 65 and does not make an active choice, he or she is placed by default into traditional Medicare. Typically then the enrollee will need to decide whether or not to buy a Medigap plan to cover the 20 percent or so of charges that traditional Medicare does not cover, and also a Part D plan to cover drugs. Those Medigap policies can be pricey. And if you decide not to buy those plans when you turn 65 or enroll in traditional Medicare, there can be a penalty — on both Medigap and Part D — that is slapped on top of those two plans, if you can get one. Plus, in most states, the insurers can subject you to a health assessment, which is what happened to the firefighter heading for a transplant.
But many employers and unions, like the New York City public employees’ union, want to default retirees into Medicare Advantage because it costs less. This was the strategy of the New York public employees’ union – they would have saved money by putting retirees into Medicare Advantage, where the U.S. government (and the taxpayer) pick up the tab, instead of having the union pay for a Medigap plan and also a Part D drug plan.
In this way, the unions seemed to be using Medicare Advantage to bolster their coffers, at the expense of retirees shifted into a Medicare Advantage plan with a limited network and more denials of care via prior authorization.
“Once a Medicare enrollee has chosen an MA plan, they are constrained to a network of providers, which restricts their choice of doctors and hospitals, compared with traditional Medicare enrollees, who can see nearly any Medicare provider nationwide,” the Center for American Progress, a liberal public policy and research organization, wrote recently. “Sometimes, M.A. networks can be very limited: According to a 2017 report, M.A. networks, on average, included fewer than half (46 percent) of all Medicare physicians in a given county. Data show that some M.A. plan networks are restricted to an area as small as a single county, and nearly half of M.A. plan networks include no psychiatrists. One study of cancer patients from 2015 to 2017 found that M.A. enrollees were 6 percent less likely than T.M. enrollees to use “top-ranked cancer hospitals for complex cancer surgery,” suggesting that beneficiaries in M.A. plans also have less access to at least the best cancer care….
“Further, burdensome prior authorization requirements and care denials have led a growing number of hospitals and health systems to stop accepting some M.A. plans altogether. Citing reported losses of $75 million, one health system in San Diego recently terminated the contracts of the M.A. plans of more than 30,000 beneficiaries. A 2023 report in Becker’s Hospital CFO Report listed a dozen hospitals and health systems that have recently cut ties with M.A. plans, allegedly as a result of slow, excessive, and unreasonable prior authorization and claims denials that result in financial losses for hospitals. As providers drop M.A. networks, patients are left with fewer choices, and the M.A. program as a whole becomes less sustainable.”
In addition to the limited networks, Medicare Advantage costs the U.S. government more than traditional Medicare costs. Also most of the big Medicare Advantage insurers have been fighting government charges that they overbill, gaming the system to make more money by representing their enrollees as sicker than they really are.
Hospitals leaving
At least 41 hospital systems have dropped out of 62 Advantage plans in all or parts of 25 states since July, Becker’s Hospital Review reported earlier this year.
Hospital and health system withdrawals from Medicare Advantage seem to be picking up steam. In late 2024, the Minnesota Attorney General, Keith Ellison, warned Medicare enrollees during open enrollment period to check if their plans covered treatment from the doctors and hospitals they use.
“It’s my mission to help Minnesotans afford their lives, which is why I am raising the alarm around some significant issues with certain Medicare Advantage Plans,” Ellison said in a statement, according to 6ABC News. “If you receive health insurance through Medicare, please spend some time reviewing your options before December 7, and please urge any friends, family, and loved ones on Medicare to do the same. I am also calling on members of the media to use their platforms to share this critical information far and wide to help ensure Minnesota’s seniors are not forced to spend a year stuck in a health insurance plan they cannot actually make use of.”
In some cases when major health systems have dropped out of Advantage networks, the Centers for Medicare & Medicaid Services has offered special enrollment periods letting Advantage members change plans. They were also allowed to leave Advantage plans entirely and choose traditional Medicare without penalty, in some cases.
Read our Medicare overview here.
