Why does Medicare have to be so complicated?

Dr. Steve looked at me in dismay and asked, “so I have to get Part A, Part B, Part C including Part D or a Medigap with a stand alone Part D? How the hell they did think of this stuff?”

Well, here’s how.

Medicare has been a work in progress ever since it was introduced in 1965 as a way to provide health insurance for individuals 65 and over or those under 65 with certain conditions – essentially individuals for which health insurance was prohibitively expensive. 

In the beginning, there were two parts – A and B.

Part A covered hospital stays and Part B covered outpatient needs.

Since Part A and Part B did not cover 100% of medical costs, this gave rise to an industry of privately run Supplemental (Medigap) Plans to “supplement” costs not covered by A and B.

In 1997, Part C plans came on the tail of the popularization of managed care. Part C plans are also called “advantage” plans because they are suppose to give an “advantage” over just A and B.   Advantage plans can cover costs not covered by Medicare such as glasses, gym memberships, hearing aids etc while providing a more coordinated care system through a defined network of providers and cost sharing (co-pays, co-insurance) to motivate individuals to stay healthy.

In 2006, Part D came into existence when prescription drug costs became a significant part of healthcare delivery.  Prior to 2006, some Supplemental Plans provided coverage for prescriptions but after 2006, prescriptions were provided via either stand alone Part D plans or integrated into Part C plans. 

There you go, a quick history of Medicare.

As a Land Rover dealership once told me “Remember folks, we don’t make them, we just sell them!”

Sources: medicare.gov