Medicare Advantage plans fail to deliver
The federal government gave health care companies a chance to save taxpayer money by partially privatizing Medicare. They blew it.
Taxpayer-funded Medicare provides socialized health care to 61 million older and disabled Americans. Private insurers will try to entice as many as possible into Medicare Advantage, alternative plans they promise will provide more benefits while costing taxpayers less. Critics say they do neither.
Congress and President Bill Clinton created the Medicare+Choice (Part C) option in 1997 to reduce the federal budget. Private insurance companies said they could better manage Medicare patients than could government employees.
The argument fits into the private-sector-is-good, big-government-is-bad philosophy of the era. President Ronald Reagan had convinced Americans that MBAs could generate enormous profits and make the world a better place by protecting the public from bureaucracy.
The pitch deck makes a compelling case for what is now called Medicare Advantage. With access to tons of medical data, private insurers could create narrow networks of interconnected doctors and hospitals to offer highquality care while reducing waste and abuse.
If you’re a senior enrolling in Medicare, Advantage plans cap out-of-pocket expenses and may include dental and vision coverage. Many offer gym memberships, and some offer rebates on the Medicare Part B premium that all must charge.
This year, about 42 percent of people eligible for Medicare chose an Advantage program, about 26 million Americans. Unfortunately, Medicare Advantage is not suitable for everyone.
The program has lower premiums, but consumers still have out-of-pocket costs such as copays, co-insurance and deductibles. The more you use Medicare Advantage, the less likely you will save money compared to Original Medicare with a Medigap plan, a supplemental policy that offsets costs.
If you have many medical needs and a decent retirement income, Advantage will likely cost you more than the original. If you don’t figure this out during the first year, you may not be eligible
More than a dozen people are charged in May in a series of Medicare COVID scams.
for Medigap if you switch back, which means higher costs.
Some people in Medicare Advantage HMO and PPO plans complain they cannot access doctors or specialists as quickly as they could with private insurance or Original Medicare. This is how Medicare Advantage is supposed to save money, by making sure you only see who the insurer thinks you really need to see.
Medicare Advantage almost always offers more benefits to healthy seniors, but it fails to save taxpayer money, according to the Medicare Payment Advisory Commission’s report to Congress.
“The Commission estimates that Medicare currently spends 4 percent more per capita for beneficiaries enrolled in MA (Medicare Advantage) than it spends for similar enrollees in traditional fee-for-service (FFS) Medicare,” the commission found.
The private sector is charging the government more per patient than it would have cost if the government had done the job itself. That’s what happens when for-profit corporations try to provide essential services the government can offer at cost.
Insurers offering Medicare Advantage, unsurprisingly, are interested in profits as much as they are patients. They aggressively market their plans in parts of the country where payment formulas give them the best chance to make more money. The programs stay away from places where needs are highest and profits low, particularly rural areas.
Medicare could change the formulas, so taxpayers at least don’t lose money. But we all know what happens when regulators try to change the rules. Big health insurers have an army of lobbyists to make sure no one touches their profits.
Medicare Advantage’s other problem is fraud. The government’s per capita payments are determined by the health of the individuals enrolled in the program. The Office of the Inspector General of the Department of Health and Human Services found that insurers are exaggerating their enrollees’ so-called health risk assessment to collect higher per-capita payments.
“This review identified 3.5 million beneficiaries with diagnoses reported only on HRAs (health risk assessments) yet with no other encounter records for visits, procedures, tests or supplies that contained the diagnosis reported on the HRA,” investigators found. These exaggerated health problems reap Medicare Advantage programs billions of dollars in undeserved income every year, the report warned.
Congress passed a law in 2019 ordering Medicare to crack down on exaggerated diagnoses. But Medicare has yet to implement the proposed rules because the health care industry objects to them. Political pressure has tied the bureaucrats’ hands, costing us all more in taxes.
The U.S. health care industry keeps rejecting tighter regulations while promising it will lower costs. They are failing and leaving us with one of the most expensive and inefficient systems in the world. Worse yet, the private sector is intent on keeping it that way.