It’s hard to say what the retiree healthcare segment on NBC Nightly News last Tuesday was all about. It was a confusing, garbled, too-brief mess of a story on one of the most complex and important topics for older people and those nearing retirement. That’s a shame, since people in this demographic still watch the evening news shows and often take to heart what they hear.
In this case, Nightly News told the story of a couple named Jack and Kate Cohen, who had just learned that IBM, where Jack had worked for 31 years, is about to outsource its company-sponsored health plan for retirees. That corporations are shedding retiree benefits is hardly news—they’ve been doing that for nearly two decades. As NBC correspondent Tom Costello reported, in 1993, 40% of large employers offered health benefits to Medicare-eligible retirees; by 2011, only 16% did.
A worrying statistic, for sure, but Costello made it sound that the Cohens were in a real pickle with no options for Kate, who has stage four terminal breast cancer. “Her current doctors are not in the new plan,” he said. Cut to Kate, who says the news is “earth-shattering… beyond earth-shattering.”
I know that news shows thrive on drama and hyperbole, but this was over the top—and incomplete at best. What is the “new plan”? What sort of coverage do the Cohens have now? What are their other options? How representative is their experience? Viewers couldn’t learn any of that from the segment, which spent as much time on Jack’s reminiscing about ’60s singing groups as these details. There was a passing reference to a “private Medicare exchange,” but no explanation of what that is. (Hint: it’s not one of the new public Obamacare exchanges for working-age folks.) If you Google “Exchange Solutions,” the identifier NBC gave to the business that IBM is turning over its health plans to, and you won’t even find the right company. The segment left me—and no doubt other viewers—scratching my head in bewilderment.
We can find some clarity in a Sept. 7 Wall Street Journal article by Spencer E. Ante, which probably tipped NBC off to the news in the first place. Here are the basics:
In notices signed by Chief Health Director Kyu Rhee, IBM has told retirees in recent weeks that to keep receiving coverage, they will need to pick a plan offered through Extend Health, a large private Medicare exchange run by New York-based Towers Watson & Co.
Medicare is the federally administered system of health insurance for people age 65 and over, and the disabled. Some people buy Medicare Advantage plans, administered by private insurers, and others buy policies to cover gaps in Medicare coverage.
… Instead of subsidizing retiree health premiums directly, IBM will give retirees an annual contribution via a health retirement account that they can use to buy Medicare Advantage plans and supplemental Medicare policies on the exchange, as well as pay for other medical expenses. Retirees who don’t enroll in a plan through Extend Health won’t receive the subsidy.
So it sounds like there’s not one specific “new plan” offered to IBM’s retirees, but a menu. Those Medicare Advantage plans offered by the exchange won’t allow patients to choose physicians; they must use the doctors in the plan’s network. But many people on Medicare—for which the Cohens are both eligible—do enroll in those “supplemental” policies, known as Medigap, to allow them to choose their doctors and fill in other benefit gaps. To really get a handle on the Cohens’ predicament, we’d want to know whether any of the supplemental policies in the exchange include access to Kate’s doctors. (We’d also want to know how large a subsidy IBM is going to offer—but that won’t be announced until around Oct. 1, according to the Journal.) And if the exchange options don’t include access to those doctors, we’d want to get a sense of how much the right Medigap policies would cost the Cohens out of pocket—an alternative the Nightly News segment doesn’t even acknowledge.
It may be the case, once all the details are in, that finding new doctors is the price the Cohens will have to pay for IBM’s continuing financial support. In an effort to control costs, insurers and employers increasingly are offering limited networks of providers—the ones who agree to steep discounts. And it will be important to watch this trend going forward—as one observer told the Journal, part of the advantage of a private exchange to a company like IBM is that it won’t have to do the dirty work of restricting coverage in the future.