To the uninitiated, Medicare, Medicare Advantage (MA) and Medicare supplement plans can seem simple enough: Medicare covers 80% of hospital and physician costs and MA and supplement plans cover the rest.

But in reality, Medicare and its associated additional plans can be incredibly complex to navigate. This is one of many lessons that Kate Yandell has learned since 2018, when she began reporting on Medicare beneficiaries’ financial challenges after a cancer diagnosis.

In a new AHCJ How I Did It, Yandell, an editor at Cancer Today, explained that she set out to write a short article for the publication’s website. Medicare, MA and supplement plans do not lend themselves to brevity. Therefore, months later, Yandell wrote a well-researched feature story of more than 2,500 words, Learning Medicare’s ABCDs.

“I thought I would write a brief article for our website based on a patient interview and explain the financial potholes one could run into as a Medicare beneficiary. Easy, right?” she said.

What Yandell learned is similar to what many other health care reporters have found: Writing about the out-of-pocket (OOP) costs that Medicare beneficiaries face is a significant challenge.

For example, she cites research published in JAMA Oncology in 2017 on what Medicare beneficiaries pay out of pocket for care. In that article, “Out-of-Pocket Spending and Financial Burden Among Medicare Beneficiaries With Cancer,” Amol K. Narang, M.D., and Lauren Hersch Nicholas, Ph.D., MPP, reported that Medicare beneficiaries with a new cancer diagnosis were vulnerable to high costs that they would need to pay out of pocket depending on their supplemental insurance.

This point is significant for health care journalists because Medicare Parts A and B cover much of the costs of hospital and physician care, but not all costs. Medicare members need to pay out of pocket for many services, and those costs can add up quickly, as this blog reported earlier.

As Narang and Nicholas reported, “… beneficiaries without supplemental insurance incurred OOP expenditures that were a mean of 23.7% of their household income, with 10% incurring OOP costs that were 63.1% of their household income. Hospitalizations were a primary driver of these high OOP costs.”

For patients without supplement coverage, these numbers are staggering. Few elderly patients’ households would be able to absorb health care costs totaling almost 25% of income and fewer still would be able to cover costs exceeding 60% of income. After all, most of those patients are on fixed incomes, meaning many would quickly use up their life savings.

In other words, a cancer diagnosis would not only be potentially fatal, but it could lead to financial ruin as well. Hence the term “financial toxicity.”

Keep in mind that the patients Narang and Nicholas wrote about had no additional coverage. Some Medicare supplement plans cover almost all Medicare beneficiaries’ out-of-pocket costs, but some Medicare Advantage plans and even some supplement plans come with very high OOP costs.

As we have reported, Medicare Advantage plans spend a lot of money on advertisements promoting the benefits of what they call “zero-dollar” premium plans. While it’s true that the premiums for these plans are free, health insurers can charge as much as $7,550 for in-network care and $11,300 for in-network and out-of-network care this year, according to a report in January from the Kaiser Family Foundation, “A Dozen Facts About Medicare Advantage in 2020.”

In addition to the out-of-pocket costs that Medicare beneficiaries would pay for an MA and supplement plan, beneficiaries also are likely to pay out of pocket when they pick up their medications under Medicare Part D, the prescription drug program.

As Yandell explained in her Cancer Today article, the high cost of OOP payments can lead some patients on Medicare to forgo treatments.

Joseph Burns (@jburns18), an independent journalist who resides in Brewster, Massachusetts, is AHCJ’s topic leader on health reform. He welcomes questions and suggestions and tip sheets at joseph@healthjournalism.org.