It appears from the POV of the customer they’re giving away a free product that they spend tons of advertising to get you to buy, and it includes free stuff like preventive care. It has all the hallmarks of a scam but I can’t see who’s being scammed.
In: Economics
Medicare Advantage (Medicare part C. Real. Not a scam) plans receive a fixed payment per beneficiary from the federal government. The difference between the total of those fees, and the claims they pay out every year, is how they make a profit. The theory is that they are, therefore, motivated to provide care more efficiently than the traditional Medicare fee-for-service model.
On the revenue side, because they earn fixed amounts per beneficiary, they are incentived to advertise to and provide incremental benefits to enrollees to try to attract them. E.g. to offer coverage for some services which Medicare excludes.
On the costs side, because the fixed payment is their only source of revenue, Medicare Advantage tends to operate more like private insurers who share their profit motive. I.e. to try to keep costs to a minimum. They do this, for example, by requiring co-payments for visits, limiting the network to certain providers, reducing administrative overhead, and other features of “managed care” plans.
Whether or not they actually succeed in doing so is a matter of much debate.
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