Medicare Beneficiaries and Choice in the Detroit .../media/publications/pdfs/medchoicedetroit.pdfMedicare+Choice, beneficiaries in Detroit have had two options: stay in traditional

ProfileMONITORINGMEDICARE+CHOICE

Medicare Beneficiaries and Choice in the Detroit Metropolitan Area, 2000by Marsha Gold, Cheryl Young, and Beth Stevens

Medicare is a national program, but the people it serves—theelderly and many persons with disabilities—live in statesand local communities. Despite substantial and high-profile

concern about the choices that Medicare offers beneficiaries, there isvery little information to describe how Medicare+Choice is working atthe local level, where beneficiaries make decisions based on thephysicians, hospitals, and health plans available to them. UnderMedicare+Choice, beneficiaries in Detroit have had two options: stayin traditional Medicare and decide whether and how to obtain supple-mental coverage, or join a coordinated care plan such as an HMO. It is important to understand how beneficiaries see their choices todetermine how to make the program work better for them where theylive.

This Profile highlights how beneficiaries are dealing with Medicareand Medicare+Choice in the Detroit metropolitan statistical area(MSA). We describe the demographic characteristics, supplementalcoverage, relevance of choice, and information sources used to sup-port choice by beneficiaries. Data come from a week-long visit toDetroit in winter 2000 and a survey of Medicare beneficiaries in spring2000, conducted as part of the Monitoring Medicare+Choice Projectfunded by The Robert Wood Johnson Foundation. The Appendix sum-marizes the findings from the Detroit site visit, including insights fromthe field on beneficiary concerns and needs.

Detroit’s Medicare BeneficiariesMedicare beneficiaries represent 13 percent of the population in theDetroit metropolitan area—about 560,000 individuals. Thirteen per-cent of Detroit’s Medicare beneficiaries are under age 65 and qualifyfor Medicare because of a disability or other condition. The rest are

DETROIT AT A GLANCE: In Detroit, perspectives on insurance coverage for Medicare beneficiaries are heavily influenced by the big threeautomakers and their suppliers. In 2000, half of all Medicare beneficiaries in the Detroit metropolitan area received supplemental coverage from an employer, substantially higher than the proportion in the nation overall. Yet, 13 percent of individuals in Detroit haveno supplemental coverage. This is not much lower than in the nation as a whole, despite more extensive employer coverage and theavailability of Medicare health maintenance organization (HMO) options that, for some, provide a more affordable alternative to coveragewhen subsidized coverage through an employer or Medicaid is not available. This Profile provides new data on Detroit’s Medicare beneficiaries to help local policymakers better respond to beneficiaries’ concerns and questions about their choices under Medicare.

Detroit U.S. Counties All Unitedwith States

Medicare+Choice

Under 65 years 13% 12% 12%65-84 years 77 77 7785 and over 9 11 11

White 79% 85% 87%African American 18 9 9Other 4 6 5

Hispanic 1% 6% 4%

Language other than English 4% 5% 4%

Less than high school 28% 27% 26%High school graduate 38 38 39Some college or more 34 35 35

$10,000 or less 25% 24% 27%$10,001-$20,000 25 33 33$20,001-$35,000 27 18 19$35,001 or more 24 25 21

Married 48% 46% 48%Widowed 38 41 40Divorced/separated/never married 14 14 13

Number of beneficiaries 561,027 22,975,165 34,176,552

SOURCE: MPR Survey of Medicare Beneficiaries, 2000

Medicare Beneficiaries, 2000

Table 1

D E T R O I TApril 2001

The Monitoring Medicare+Choice Project of Mathematica Policy Research, Inc., seeks to provide credible and timely

information on insurance decisions made by Medicare beneficiaries. It is funded by The Robert Wood Johnson Foundation.

over age 65 (see Table 1). The primary minority group among Detroit’sMedicare beneficiaries is African Americans, who comprise 18 percentof beneficiaries in the MSA and a larger proportion in the city ofDetroit. Detroit also has a smaller Asian and Hispanic community, aswell as a concentration in Dearborn of individuals of Arabic/Chaldeanbackground.

As is the case nationally, Detroit’s Medicare beneficiaries tend tohave low to moderate incomes: 25 percent have annual incomes of$10,000 or less, and another 25 percent have incomes between$10,001 and $20,000. Only 24 percent have incomes of $35,001 ormore. The education level of beneficiaries is also relatively low; only34 percent have some college education, and 28 percent did not grad-uate from high school. Literacy appears to be a problem for some ben-eficiaries. In addition, 8 percent have poor vision.

Health status varies (see Figure 1). While 12 percent self-ratetheir health as excellent, 30 percent say it is only fair or poor. Thirty-seven percent of Detroit’s beneficiaries report one or more of threefunctional disabilities asked about in the survey.

Supplemental Coverage in DetroitIn Detroit, 13 percent of Medicare beneficiaries had no source of sup-plemental coverage in 2000 (see Table 2). This is about on par withother counties in the United States with Medicare+Choice, though itis below the general U.S. experience.

More so than in most communities, Detroit’s Medicare market isheavily influenced by employment-based coverage, reflecting the roleof the automobile industry in Detroit and the extensive retiree healthbenefits negotiated between labor and management. Half of allMedicare beneficiaries in Detroit obtain supplemental benefits throughan employer, which is substantially higher than the national experience.

Despite the dominance of employment-based supplemental cover-age, Detroit’s share of Medicare beneficiaries without supplementalcoverage—13 percent—is about on par with the nation. Half ofDetroit’s Medicare beneficiaries rely on the individual market to obtaincoverage through Medigap, Medicaid, or a Medicare HMO. The nationaldata showed that inability to afford supplemental coverage is the mainreason individuals lack it. Some also may think they are not eligible forMedicaid even if they are, or they want to retain the freedom to see theirown providers and do not choose an HMO option. In 2000, Medigap pre-miums for a 65-year-old male in Detroit (Plan F, Wayne County) rangedfrom $1,032 to $1,862 annually (Quotesmith.com, 2000).

Medicare HMO penetration in Detroit is substantially lower than inother areas of the country—only 9 percent of Detroit’s Medicare pop-ulation are in a Medicare HMO. Low penetration reflects the design ofretirement benefits under many auto worker contracts and their rela-tively limited or even negative incentives to enroll in an HMO, particu-larly through Medicare (see the Appendix). However, this probably is notthe only reason, because even among those in the individual market,enrollment in Medigap is substantially greater than in Medicare HMOs.


Medicare+Choice

None 13% 13% 17%Medicare/HMO 9 24 16Employer group 50 37 34Medigap 19 22 21Medicaid 11 13 14Military 3 6 6Other1 12 13 14


NOTE: Beneficiaries may have more than one source of coverage, so columns do not total to 100 percent.

1Some sources appear to duplicate other coverage. Self-reports were reviewed to exclude such coverage as long-term care, life insurance, etc.

Sources of Supplemental Coverage, 2000

Table 2

1213

5751

3036

717

2441

Health and Functional Status of Detroit Beneficiaries, 2000(in percent)

Figure 1

0 5 10 15 20 25 30 35 40

1214

2430

34

3737

29

128

96

Health StatusExcellent

Very good/good

Fair/poor

Needs HelpPersonal care

Routine needs

Condition interferingwith independence

At least one ofthe above

Blind/poor vision

Deaf/poor hearing

Trouble Reading*3+

1+

SOURCE: MPR Survey of Medicare Beneficiaries, 2000*Individuals saying yes to having problems reading any of the following: Newspapers, directions for takingmedicine, health provider notes, food package labels, recipes, and books. Based on those with less than ahigh school education and at least good vision.

Detroit U.S.

2

Consideration and Relevance of ChoiceThe vast majority of Medicare beneficiaries in the Detroit MSA, likebeneficiaries nationally, do not consider their choice of health planeach year. Choice was only “salient” to 11 percent of Detroit-areabeneficiaries for the enrollment period beginning September 15, 1999,through the time of the survey (see Figure 2). In this Profile, saliencerefers to active or serious consideration of choice by beneficiaries,either voluntarily (e.g., a beneficiary wants coverage for pharmacy orlower out-of-pocket costs) or involuntarily (e.g., a new beneficiarymust choose, or a beneficiary’s HMO leaves the program). The salientgroup includes (1) new beneficiaries who must make a choice amongMedicare coverage options; (2) current beneficiaries who switch to,from, or among HMOs (switchers); and (3) beneficiaries who reportthey had considered making a change since September 15, and char-acterized this consideration as very or somewhat serious, even if theyultimately did not make a change.

In reality, a small proportion of beneficiaries think about choice,and fewer actually make changes. In Detroit, this is especially so. Ofthe 11 percent for whom choice is salient, only 1 percent actuallyswitched plans. (Nine percent considered change but did not make it,and 1 percent were new beneficiaries.) The most common reasongiven for not considering choice seriously is that beneficiaries are relatively satisfied with their current coverage. This is especially thecase for those with group-based coverage.

In Detroit, as in the nation, most beneficiaries are relatively satis-fied with their coverage, with only a small minority rating coverage asfair or poor or not willing to recommend their plan to a friend (seeFigure 3). This could change in the future, since half of all beneficiariesin Detroit say their premiums were higher in 2000 than in the previousyear, and cost is an important factor influencing satisfaction (seeTable 3). Fifty-two percent reported higher out-of-pocket costs for drugs.


Medicare+Choice

INSURANCE PREMIUM, COMPARED TO LAST YEARHigher 49% 57% 54%Same 49 38 41Lower 2 5 5

OUT-OF-POCKET COSTS FOR DRUGS, COMPARED TO LAST YEARHigher 52% 55% 52%Same 43 39 41Lower 5 6 7

WORRY ABOUT ABILITY TO PAY BILLS, COMPARED TO LAST YEARMore 25% 28% 30%Same 65 62 61Less 11 10 9


NOTE: Numbers do not total 100 percent due to rounding.

Trends in Cost of Coverage, 2000

Table 3

2926

6563

711

2932

4236

27

52

27

8487

8182

Perception of Current Coverage, Detroit, 2000 (in percent)

Figure 3

Percent for Whom Choice Was Salient, DetroitFall 1999/Winter 2000

Figure 2


1% New beneficiary

9% Considered change but made none

1% Switcher

89% No change or considerationof change

11% Yes

2925

5660

1415

Range of Services CoveredExcellent

Very good/good

Fair/poor

Value of Care for What You PayExcellent

Very good/good

Fair/poor

Experience with Current Coverage10 (best)

8-9

5-7

4 or less

Would Recommend Plan to a Friend

Would Recommend Plan to a Friend with Chronic Illness

Yes

Yes

3

Detroit U.S.


As a result, 25 percent of beneficiaries reported worrying more in 2000than in 1999 about their ability to pay bills; nearly half as many—11percent—reported worrying less. This means that choice couldbecome more important to beneficiaries in the future as they balancecost with coverage and other competing needs. Nationally, those wholack a source of supplemental coverage were substantially more likelyto be dissatisfied with their current coverage than others.

Beneficiaries are markedly similar across communities and sub-groups on the factors they would consider very important if they werechoosing a plan today. By far, the dominant concern is whether theycan get health care when they are sick (see Figure 4). Sixty-one per-cent of beneficiaries in the Detroit MSA say this would be extremelyimportant if they were choosing a health plan today. Otherwise, bene-ficiaries appear to be about equally concerned with benefits and costs(e.g., inclusion of prescription drug coverage, keeping premiumsdown, having low out-of-pocket costs) and the ability to access theprovider they wish (e.g., having a choice of personal doctor, the abilityto self-refer to a specialist).

Process of Choice for Those Making or Considering It Beneficiaries in Detroit who make a change or seriously consider doingso have mixed experiences, just like beneficiaries across the nation.For the most part, beneficiaries say they are very confident or at leastsomewhat confident of their ultimate decision (see Figure 5). Somereach this endpoint with relatively little effort, but others seem to findthe decision-making process more difficult. Forty-three percent saytheir decision was relatively easy to make, yet slightly more—47 per-cent—report that the decision was hard. Nineteen percent say theyspent no time making a decision, and another 40 percent spent a dayor less. At the same time, 30 percent spent four days or more, and 12percent spent two to three days. Presumably, reaching the subgroupfor whom decision making is more difficult is an important function ofthe Health Care Financing Administration’s (HCFA’s) MedicareNational Education Program and the community organizations that

educate and counsel Medicare beneficiaries.The number of beneficiaries and the different subgroups of bene-

ficiaries that both national programs and community organizationsreach to educate and support is less than optimal, in large partbecause the resources available are limited. Senior citizens’ organiza-tions appear to reach more beneficiaries in Detroit than do agencies inother communities in the survey, with the exception of Baltimore.

However, beneficiaries in Detroit, as elsewhere, rely for the mostpart on informal sources to provide them with important informationto support their choice of provider (see Figure 6). In Detroit, 27 percentsay their spouse, other family, or friends are the most importantsource of information; 20 percent rely on their personal physicians(which is less than beneficiaries nationally do). A current health planis the main source of information for 13 percent, and another 13 percent

Profile of Decision-Making Process for Those for Whom It Is Salient, Detroit, 2000

Figure 5

Somewhat easy17%

Ease of Decision Time Spent on Decision Involvement of Others Confidence with Decision

Very easy 26%

Neither hardnor easy 10%

Somewhat hard30%

Very hard 17%

2-3 days 12% 4+ days 30%

1 day5%

None19%

Few hours 35% Someone elsedecided 3%

Decided byself 46%

Decided with others51%

Not very 3% Not at all 2%

Very 70%

Somewhat 25%

6561

5551

54

4545

51

4244

4044

4648

3637

Detroit Beneficiaries Saying Certain Factors Would Be“Extremely Important” If They Were Choosing a MedicarePlan Today, 2000 (in percent)

Figure 4


If sick, can get care

Prescription drug coverage

Choice of personal doctor

Ability to self-referto a specialist

Keeping premiums down

Low out-of-pocketcosts

Easily getting careaway from home

Limiting paperwork

4

Detroit U.S.



rely on an employer. Eight percent rely most on Medicare, and 19 per-cent on various other sources.

In Detroit, 24 percent of Medicare beneficiaries for whom choicewas salient at the time of the study say that they used informationfrom seniors’ organizations, compared with 10 percent nationally(Table 4); 5 percent of them said it was their most important sourceof information. In Detroit, a core group led by the Medicare MedicaidAdvisory Program (MMAP) conducts Medicare education. The DetroitMMAP, Part B carrier, and Michigan Peer Review Organization (MPRO)

coordinate education efforts, share volunteers, and collaborate frequently on group educational activities. The state MMAP contractswith two local groups serving Detroit: (1) the Detroit Area Agency onAging (AAA), which serves the city of Detroit and eastern WayneCounty, and (2) the Detroit Senior Alliance, which serves western andsouthern Wayne county. The Detroit-based Arabic/Chaldean commu-nity center provides translation services to seniors applying forMedicare, and the Michigan Protection and Advocacy Service, Inc.,which serves the under-age-65 disabled population, is starting ademonstration project to increase the number of seniors enrolled inMedicaid options. Health plan marketing also is active in the area,and, with their resources, HMOs often are the most visible source ofMedicare+Choice information.

More so than in other communities, education is heavily influ-enced by the resources and associated demands of the automobileindustry and group accounts. Each of the automakers has its ownNational Benefits Service Center that it runs in cooperation with theUnited Auto Workers (UAW). Group accounts also often generatedemands for MMAP activity, such as presentations to retiree groups.

In Detroit, as in the nation, the Internet is used rarely by Medicarebeneficiaries seeking to make a choice, even though HCFA’s beneficiary-oriented Web site (www.medicare.gov) contains extensive information.In Detroit, only 5 percent said the Internet was a source of informationfor them. Use is so low probably because the vast majority of benefi-ciaries, at least in early 2000, do not use the Internet. Only 19 percentof beneficiaries in the Detroit MSA say they have ever used theInternet or Web for any purpose. Medicare information provided on theInternet is indirectly available to beneficiaries through other sources,of course, such as family members or counselors.

Lessons for the Future Findings from both Detroit and the national study highlight ways inwhich decision-making support for beneficiaries can be enhanced.

First, improve the availability of one-on-one sources of unbiasedinformation. Despite the ability of Detroit’s community counselingorganizations to reach more beneficiaries than agencies in most of theother communities, only 20 percent of all Detroit beneficiaries saidthey knew of a local, free, and unbiased source of counseling aboutMedicare and choosing a health plan, and 60 percent more wereuncertain about the availability of such a source. Yet there seems tobe a demand for such sources. In Detroit, 33 percent of beneficiariessaid they very likely would use such a source if it were available andthey needed help; another 26 percent said they would be somewhatlikely to use it. Demand is similar elsewhere in the country.

Second, tailor information better to the diverse needs of benefici-aries at the local level, something Detroit agencies recognize and areattempting to do with their limited resources. The national study foundsubstantial differences in the information strategies used by differentsubgroups of beneficiaries. Given the characteristics of the Detroit

Most Important Source of Information for DetroitBeneficiaries Considering Choice, 2000

Figure 6

Sources of Information Used to Make Choices, Those forWhom It Is Salient, 2000

Table 4

20% Doctor

19% All other

8% Medicare/Social Security13% Employer

13% Current health plan

27% Spouse/family/friend



ANY USEDetroit U.S. Counties

withMedicare+Choice

Current health plan 56% 51%Medicare/Social Security/state 66 43Doctor/other medical provider 33 49Local hospital/clinic 15 20Spouse 35 19Other family 38 29Friend 39 23Employer/union 20 24AARP/other senior 24 10TV/radio 20 18Library/newspaper 21 20Internet 5 3Meetings/mail 1 <1


5

population, the following national findings are particularly relevant:

• Under-age-65 disabled population: These individuals do not relateto aging organizations, even though they are a major source ofinformation for Medicare beneficiaries. Despite the fact that a highshare of the under-age-65 disabled subgroup lacks supplementalcoverage, few sources of information target this group’s concerns.Those that do include employer-based coverage and its relation-ship to Medicare, options for individuals who are dually eligible forMedicare and Medicaid, and coverage issues associated with spe-cific health care needs for those with disabilities.

• Some minorities and ethnic groups: People in these subgroupsoften look within their own communities for organizations whoseinformation they trust. In Detroit, national findings confirm theimportance of strengthening and expanding such outreach efforts.Some efforts exist to reach out to groups such as theArabic/Chaldean community.

• Lower-income and less-educated beneficiaries: These individualsare not reached as effectively with written material. Instead, one-on-one counseling appears to be more effective. Many people inthis subgroup ask their physicians for information, although this isless the case among minorities and in Detroit than elsewhere.Outreach through physicians, together with general outreachdirecting individuals to sources of personalized assistance, maybe of considerable value in better meeting the needs of theselower-income and less-educated beneficiaries. In addition to gen-eral outreach, developing materials that physicians can give topatients referring them to sources of support may be valuable.

• Beneficiaries with poor health or disabilities: These individuals aremore likely to be socially isolated and unable to access existinginformation. Reaching them probably requires working with physi-cians (because those in poor health see physicians more than dobeneficiaries in good health) and addressing the access barriersthat make it harder for them to use available sources of unbiasedcounseling (e.g., mobility problems for the homebound).

Third, make written material more accessible to beneficiaries anddevelop and promote other opportunities to support informed choice.Like beneficiaries nationally, only 52 percent of Detroit’s Medicarebeneficiaries know whether they received the Medicare handbook.Among those who did know, only about a third used it. Though experi-ence may increase their familiarity with and awareness of the hand-book, it is important to continue developing other forms of writtenmaterial to make information more accessible to beneficiaries so thatthey will refer to it. The national study found that significant emphasis

was placed on developing, improving, or distributing written materials.However, written materials are not enough, even when they are of highquality and appropriately targeted and disseminated to beneficiaries.One-on-one counseling and other targeted efforts are crucial toaddressing the needs of all Medicare beneficiaries as they considerchoice.

Fourth, be realistic about the role of education about choice forMedicare beneficiaries. The findings of this project highlight the cur-rent limits of the infrastructure available to support choice forMedicare beneficiaries in communities. In most or all communities, asmall group of organizations with few resources is trying to educatemany beneficiaries with varying needs about an extremely complicatedprogram. Improving education should help many beneficiaries makeinformed choices, but there also are constraints. Medicare beneficiariesare diverse, with many having characteristics—for example, lowincome, poor health or functional disability, and difficulties with lan-guage, cognition, or reading—that complicate choice and heightencost concerns. In addition, the complexity of the Medicare supple-mental market means that the choices Medicare beneficiaries facevary with their circumstances, yet another complication. All of thismakes choice in Medicare substantially harder to support than in themore traditional employment-based market. ��

THE SURVEY ESTIMATESThis Profile is based on a survey of Medicare beneficiaries age 18 andolder with both Part A and Part B benefits on December 28, 1999.Nationally, 6,620 people responded, a 64 percent response rate.Interviews were conducted by telephone over a 15-week period, start-ing March 2, 2000. The results are weighted to provide unbiased estimates for Medicare beneficiaries nationally, in six communitiessampled separately, and selected subgroups of beneficiaries. The six communities are Albuquerque, Baltimore, Detroit, New Orleans,Orlando, and Orange County (CA).

Estimates for the Detroit MSA are based on Medicare beneficiariessampled from seven counties: Lapeer, Livingston, Macomb, Monroe,Oakland, St. Clair, and Wayne. There were 791 interviews completed,representing a 64 percent response rate. The 95 percent confidencehalf-interval for these estimates is 6.0 percent.

6

MAKING MEDICARE+CHOICE REAL: Understanding and Meeting the InformationNeeds of Beneficiaries at the Local Levelby Beth Stevens and Jessica MittlerThis excerpt on Detroit was prepared primarily by Cheryl Young.

Monitoring Medicare+Choice Project, Mathematica Policy Research, Inc., November 2000

A P P E N D I X

7

Community Characteristics

Community Definition Detroit is located in southeastern Michigan. The MSA includes Lapeer, Livingston, Macomb, Monroe,Oakland, St. Clair, and Wayne counties. Detroit is in Wayne County. Ann Arbor, in Washtenaw County, isoutside the MSA to the west and a small but increasing factor in market development. Our interviewsfocused primarily on Wayne County, with some attention to the evolving influence of the Ann Arbor HMO,MCARE.

Demographics The Detroit MSA has 4.5 million people, or 47 percent of Michigan’s population. Fourteen percent receiveMedicare benefits, and 11.4 percent receive Medicaid (1999). Fourteen percent are seniors who arebelow the poverty line (1990). Roughly 73 percent of the total population are white, 23 percent AfricanAmerican, 1.8 percent Asian, and 2.3 percent Hispanic (1998). In addition, a major Arabic/Chaldean pop-ulation is in Dearborn. A disproportionate share of African Americans live in the city of Detroit.

Labor Market Detroit’s industry is dominated by the Big Three automakers and their suppliers. The UAW is a key influ-ence, with separately negotiated and generally comprehensive health benefits for union (hourly) workersdistinct from nonunion (salaried) workers. Health benefits are a top negotiating priority for the union. Ithas opposed efforts to create strong financial incentives to encourage Medicare+Choice enrollment,which it views as privatization. The other major employers are the public sector (schools) and the healthcare sector. More than half of the Medicare beneficiaries in the MSA reportedly have employer-sponsoredcoverage—a unique feature of this market.

Political Context State Medicaid policy is fiscally conservative under Governor John Engler, a Republican. Detroit’s popu-lation has been shrinking since the late 1960s, when riots occurred and racial tension was high. However,with a new city government and renovation of the Renaissance Center as General Motors (GM) headquarters, more optimism is evident. The county and some city governments are responsible for managing the state’s public health and social service programs. Closures of private hospitals located inpredominantly minority communities in Detroit, most recently Mercy Hospital, have been controversial.

Provider Organizations

Hospitals The Henry Ford System (HFS) and the Detroit Medical Center (DMC) are the city’s tertiary care centers andthe largest Medicaid and Medicare safety net hospitals. Both have experienced recent financial lossesand cuts in services and staff. Suburban hospitals have better payer mixes and have avoided financialdownturns.

8Physicians The physician market is not organized. Most physicians practice individually or in small groups and

contract with multiple managed care organizations (MCOs). MCOs appear to have distinct networks,although they are eroding as Health Alliance Plan (HAP) expands its network coverage into Detroit’s westernsuburbs and MCARE expands its network coverage eastward from Ann Arbor into the Detroit area.

Managed Care The Detroit managed care market is dominated by local firms that offer products, primarily in southeasternMichigan. As a result of many large employer groups’ limited incentive to join HMOs, overall MSA-widepenetration is 28 percent. However, this is becoming less true, particularly in the nonunionized sector ofthe industry. Plans include HAP, which is owned by HFS and is the dominant Medicare+Choice MCO, andBlue Cross Blue Shield of Michigan (BCBSM), the dominant fee-for-service business.

Since 1993, employers and unions have collaborated on health care quality initiatives and some pur-chasing initiatives through the Greater Detroit Area Health Council’s Health Information Action Group(HIAG). HIAG evaluates MCOs on negotiated quality standards and purchases carve-out benefits such asprescription drugs and dental benefits. Until recently, these efforts did not involve the Big Three, but GMis now involved. In 1999, Detroit-area MCOs rated highly in both HEDIS and consumer satisfaction ratings.

Medicare Insurance Options

Medicare+Choice MCOs The Medicare+Choice market, which first began operating in the Detroit MSA in the mid-1990s, hasbeen relatively stable. In 2000, six Medicare+Choice MCOs serve the Detroit metropolitan area, covering55,577 enrollees as of March 2000. The largest plans are Blue Care Network, HAP, MCARE, andSelectCare; together HAP and MCARE account for 75 percent of Medicare+Choice enrollment (March2000). The high rate of employer-sponsored retiree coverage has led to fierce competition between HAPand MCARE, because the remaining pool of prospective enrollees in the individual market is small. HAPintroduced a Medicare risk product briefly in 1986, but closed it after suffering losses. This product hasgrown steadily, however, since its reintroduction in 1995. MCARE, owned by the University of Michigan,serves the western portion of the Detroit metropolitan area. Blue Care Network, a division of BCBSM, hasnot marketed its Medicare+Choice products aggressively. At the time of our visit, SelectCare was for sale.

Medicare+Choice More so than in other areas, plans market their Medicare products in Detroit in different ways to Products individuals and groups. In the individual Medicare+Choice market, the major barrier to enrollment is

the desire to retain provider choice. Choice is so important in the Detroit market than even some lower-income beneficiaries who cannot afford a Medigap plan would rather remain without coverage than enrollin a Medicare+Choice MCO that restricts choice. MCO marketing is careful to emphasize administrativesimplicity and quality, stable health care. Industry representatives note that they offer “financially stable” but“not rich” benefits, despite the area’s high payment from HCFA. Careful benefit design has enabled HAPand MCARE to be profitable with relatively small enrollments. The typical Medicare+Choice individualoffering is either a zero-premium plan with a $1,000 to $1,200 prescription drug benefit or a $68 permonth premium plan that gives access to a broader network, dental benefits, and a slightly higher prescription drug cap ($1,600). The majority of beneficiaries choose the low-cost plan.

In the group market, Medicare+Choice MCOs work through group sponsors that may offer two types ofproducts. The Medicare+Choice product involves enrollment in one of the Medicare+Choice options,

9with the employers purchasing a rider to cover the additional benefits included in their plans. In somecases, the Medicare+Choice option is the basic plan, with the rider covering most supplemental options.The alternative—based on traditional arrangements—involves direct enrollment in an employer group’sHMO. Unionized UAW retirees can join the commercial HMO offering sponsored by their former employer.They are given strong incentives to purchase Medicare Part B. With this coverage, they can see anyprovider, but only their supplemental benefits are covered in the HMO. These products act like a sup-plemental policy: MCOs are at risk for what Medicare does not pay, including copayments anddeductibles, and they bill Medicare as a fee-for-service provider. Some companies have eliminated thenon-Medicare+Choice option, especially for salaried workers.

Medicare+Choice In 2000, the average payment capitation for Medicare in the Detroit MSA (weighted by county eligibles) Capitation was $647, about 28 percent higher than the national average. Payment drops considerably outside

southeastern Michigan, with few Medicare+Choice offerings throughout the rest of the state.

Medigap BCBSM is the dominant Medigap insurer, and 90 percent of its Medigap policies are plan C, which isguaranteed issue, followed by plan F. In 1999, BCBSM introduced a blended product with features of Aand C. BCBSM has a longtime relationship with the UAW and has a strong Medicare supplemental business through the automakers.

Information Infrastructure

Key Organizations A core group, led by MMAP, conducts Medicare education outside the group accounts. The Detroit MMAP,Part B carrier, and MPRO coordinate their education efforts, share volunteers, and collaborate frequentlyon group education activities. MMAP provides on-site education services, including staff training to senior centers, meal sites, senior groups, and churches. The state Bureau of Insurance regulates bothMedicare+Choice and Medigap policies and provides some consumer information by telephone andmail. The bureau is developing a consumer Web site with information on Medicare supplemental products.

The state MMAP contracts with local groups. Two AAAs serve the metropolitan area: (1) the Detroit AAA,which serves the city of Detroit and eastern Wayne County communities, and (2) the Detroit SeniorAlliance, which serves western and southern Wayne County. The state MMAP association has contractswith the Native American center in Saginaw to provide MMAP services for the population throughout thestate. The Detroit-based Arabic/Chaldean community center provides translation services to seniorsapplying for Medicare and refers prospective Medigap buyers to an insurance agent in the community.This center is exploring the idea of forming a Medicare+Choice educational alliance with MMAP.

No single organization addresses the needs of the Medicare disabled, although the Michigan Protectionand Advocacy Service, Inc., which serves the under-age-65 disabled, will implement a HCFA demon-stration project to increase the number of seniors enrolled in the qualified Medicare beneficiary (QMB)and specified low-income Medicare beneficiary (SLMB) programs in mid-2000.

The community has limited resources, so MCOs are a key source of Medicare+Choice information. HAPand MCARE have active marketing efforts. HAP (but not MCARE) also collaborates with Wayne CountyMMAPs and Detroit-area community/senior centers. BCBSM has not marketed either its Medigap or

10Medicare+Choice products aggressively and has focused on lower-cost strategies, such as sponsoringcommunity events.

More than in other markets, education is heavily influenced by the resources and associated demands ofthe automobile industry and group accounts. Each of the automakers has its own National BenefitsService Center to respond to active and retired employees’ benefits questions by telephone and mail.Firms work cooperatively with unions on benefits, hiring union representatives to respond to members’benefit concerns. GM has been the most open among the automakers in collaborating with local MMAPsto make Medicare and Medicare+Choice presentations to its retirees around the country. Groupaccounts often generate demands for MMAP activity, as well, such as presentations to retiree groups.

Topical Focus Education focuses on the basic differences between original Medicare and Medicare+Choice. Educatorsmust tailor their presentations according to whether beneficiaries have employer-sponsored or individualcoverage. If beneficiaries have employer-sponsored coverage, educators discuss their benefits and howthey compare with those of a commercial Medicare+Choice plan. Educators also redirect beneficiariesto their employers for further assistance.

If beneficiaries have individual coverage, educators emphasize the difference between Medigap plansand Medicare+Choice coverage, and how to evaluate both types of coverage based on individual needs.Educators emphasize that beneficiaries with individual coverage do not have to change their current coverage choice.

The limited availability of Medicare+Choice options in southeastern Michigan has been a source of confusion to “snow-birds” accustomed to greater MCO choice in the Sun Belt states and to retireesreturning to Detroit to live near their families. Educators must ensure that members of these groupsunderstand which areas of the state have “real choice,” as well as the types of choices that are available.

Education Activities Group presentations by the MMAP, Part B carrier, and MPRO are the dominant education activities inDetroit. One-on-one counseling is provided almost exclusively by MMAP. As noted earlier, each automaker hasits own National Benefits Service Center to respond to benefit questions.

Outreach Outreach is active along traditional and nontraditional lines. Educators have found that word of mouth isa strong outreach method. The Detroit MMAP has made efforts to reach traditional aging groups,senior organizations including senior housing, and churches (primarily African American). Outreach to theArabic/Chaldean and Hispanic communities has been only somewhat successful. These communities aretightly knit and closed, so it is difficult for outsiders to be effective.

Essential Questions Questions vary by type of coverage. All beneficiaries have questions about differences between MedicareParts A and B, and also between Medicare and Medicare+Choice. Beneficiaries in the individual marketwho understand program differences want to know which Medigap policy or Medicare+Choice plan isbest for them. Prescription drug coverage and the ability to see their own physician are important factors.

Retirees with employer-sponsored benefits ask about covered benefits, how to enroll, and what to do withtheir Medicare card. Counselors report that these beneficiaries do not have a deep understanding of

benefits, so they ask about claims rejections and travel coverage. Employers find that they must explaincoordination of benefits between Medicare and the employer.

Availability and Quality The key actors believe they have done well, but that the quality of printed information provided by HCFA of Medicare Information should be easier to understand. Interviewees reported that many seniors were not aware of the resources

that were available. Sometimes, beneficiaries considered letters from HCFA alarming, rather than informative.

Resource Adequacy Resources for education are relatively limited, especially outside the group accounts. The intermediarieswe interviewed also expressed concern about the lack of any real effort or resources to use mass media(especially television) to provide unbiased information to beneficiaries.

Unique EffortsMMAPs and other organizations have made extensive efforts to coordinate their education activities,cross-train and share volunteers, and refer beneficiaries, as appropriate.

Detroit has an extensive infrastructure for education built to support needs of group retirees affiliated withthe programs of the three automakers and the UAW.

The Greater Detroit Area Health Council represents a unique, broad-based program to assess healthdelivery quality though a collaborative private-public sector effort.

Recommendations from the Field

Educate one-on-one about the basics. Group presentations are useful for orienting beneficiaries todifferences between traditional and managed care Medicare, but beneficiaries want one-on-one counseling for individual decision making.

Educate beneficiaries before they enroll in Medicare. Seniors need to know before they retire whatMedicare covers and the criteria to use to compare supplemental and Medicare+Choice coverage.

Increase coordination and communication between HCFA and large employers. Employers wantone HCFA staff member to contact to answer their questions in a timely way.

Use multiple media to educate beneficiaries about Medicare. Educators recommended that multipleapproaches be used to reach seniors. Radio and television can reach a broad number and range of beneficiaries, particularly the homebound.

Promote stability in the market. Educators felt that national media “horror” stories about managedcare and Medicare+Choice plan withdrawals elsewhere had made seniors wary about Medicare+Choice.

Increase awareness of available materials. Most felt that information was available, but that benefi-ciaries did not know how to access it.

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LessonsDetroit highlights the dominant role employers can play in shaping market demand if they are active inhealth issues, and the complex impact of a new Medicare+Choice program on existing employer-basedcoverage. Employers have developed sophisticated quality initiatives to evaluate health plan performancefor purchasing purposes.

In Detroit, there is an extensive need for basic education about Medicare and Medicare+Choice, not justamong lower-income beneficiaries, but among Medicare beneficiaries overall.

Finally, Detroit’s experience with closely knit ethnic communities shows that these communities requirespecifically tailored strategies for education, and that trust is a key issue.

References

InterStudy Competitive Edge 9.2. Part III: Regional Market Analysis, using data as of January 1, 1999. St. Paul, MN: InterStudyPublications, November 1999.

National Institute for Health Care Management. NIHCM Health Care System DATASOURCE, Second Edition, Washington, DC: NIHCM,1999.

Quotesmith.com, Inc. Medical Supplement Insurance Price Comparison Report. www.quotesmith.com, July 18, 2000.

Related Publications

Gold, Marsha, and Natalie Justh. “Forced Exit: Beneficiaries in Plans Terminating in 2000.” Monitoring Medicare+Choice, Fast FactsNo. 3. Mathematica Policy Research, Inc., September 2000.

Gold, Marsha, and Natalie Justh. “How Salient Is Choice to Medicare Beneficiaries?” Monitoring Medicare+Choice, Fast Facts No. 5.Mathematica Policy Research, Inc., January 2001.

Gold, Marsha, Michael Sinclair, Mia Cahill, Natalie Justh, and Jessica Mittler. Medicare Beneficiaries and Health Plan Choice, 2000.Washington, DC: Mathematica Policy Research, Inc., January 2001.

Stevens, Beth, and Jessica Mittler. Making Medicare+Choice Real: Understanding and Meeting the Information Needs ofBeneficiaries at the Local Level. Washington, DC: Mathematica Policy Research, Inc., November 2000.

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Marsha Gold: Project Director,Monitoring Medicare+Choice

The Stein Group: Editor

designMind: Design

PROFILE is published by the Washington office of Mathematica Policy Research, Inc. Visit our Web site at www.mathematica-mpr.com

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Documents

Medicare Beneficiaries and Choice in the Detroit .../media/publications/pdfs/medchoicedetroit.pdfMedicare+Choice, beneficiaries in Detroit have had two options: stay in traditional