Medicare Advantage plans work fine − until you need them

There's an old joke about a lazy man with a leaky roof. When it rained, water was everywhere, ruining his carpets and furniture. A visiting neighbor asked him why he didn't fix the roof, and the man replied, “I can't fix it when it's raining.” After the storm, that same neighbor dropped by and asked him why he wasn't up on the roof fixing the leaks, to which the man replied. “it's not leaking now.”

Medicare Advantage Plans (MA) work much the same way as a leaky roof, only the cost for not fixing them is much higher. When they were introduced in 2003 as part of “Medicare Part C,” we were told they would reduce the cost of care for Traditional Medicare beneficiaries. But recent reports show that they have done just the opposite, costing taxpayers significantly more, to the estimated tune of $140 billion annually.

Another way of viewing that $140 billion figure is to compare it with a bill proposed in 2019 that would take that $140 billion in overpayments to private insurers and add dental, hearing, and vision to the Traditional Medicare and Medicaid programs at a cost of $84 billion, saving taxpayers a total of $56 billion each year, according to the Congressional Budget Office.

Private companies, some of which have no experience in the healthcare industry, have been overpaid by CMS (Center for Medicare and Medicaid Services) for years due in part to the fact that some of its board members came from and still have ties with those same private insurers they're tasked with overseeing. The complexity of the payment formulas and the considerable absence of transparency has enabled private insurers to develop multiple methods of skirting the very regulations designed to rein-in the corruption that is now rampant within the Medicare payment system.

For example, private insurers are able to “cherry-pick” patients with fewer medical problems through a technique known as “favorable selection” to guarantee signing patients who are less likely to need any or all of the medical services that Medicare tax dollars are paying them for. This is why the MA commercials mentioned all those “free” services “are dependent upon your zip code.” They weren't free if you lived in an area where the population had a history of needing more health care.

The opposite was also true. Private insurers are more likely to drop high-need patients through a process called “favorable deselection” or “lemon-dropping” (people who need a lot of medical services are the “lemons”).

Private insurance companies then used a method known as “upcoding,” sending a “health professional” into the homes of unsuspecting seniors to “evaluate” their health status and add non-related (and sometimes non-existent) diagnoses or increase the severity rating of existing diagnoses to increase the payments received by CMS.

There are still other incentives and benchmarks built within the CMS payment system that have been exploited by private industry to account for a total of up to $104 billion in overpayment.

The remaining $36 billion of the $140 billion total has a more direct connection to that proverbial leaky roof.

For the vast majority of seniors, all of the costs and overpayments previously mentioned are behind the scenes and hidden. MA Plans look like such a “good deal” because that is exactly the way they are designed to look. The roof doesn't leak when it's not raining.

The problem comes when it rains, or in this case, when you have a major medical expense. We're not talking about the co-pays or the annual check-up with your primary care physician, we're talking necessary and sometimes life-saving surgery, or a necessary and expensive medication prescribed by your doctor when no cheaper alternative is available. MA Plans are much more likely to inappropriately deny claims that would have been covered under Traditional Medicare. This often leads to a delay in critical care and additional expenses for Seniors that would have been unnecessary had they been enrolled in Traditional Medicare. In other words, MA Plans work just fine, until you need to use them.

In the lazy man with the leaky roof story, the lazy man only harms himself by not fixing the roof. His “financial damage” occurs every time it rains. But for MA Plans, private insurers reap excessive profits from taxpayers whether a claim is filed or not. Everyone who pays taxes, regardless of their income, overpays the richest corporations in America because the “lazy man,” in this case, the men and women in Congress, don't have the will to fix it.

Private insurance companies spend millions of dollars each year to convince key members of Congress, the National Chamber of Commerce, and other groups that private insurance is better than government run, or government regulated insurance because it is part of a “free market.” But the fact is, government-run Traditional Medicare has always been cheaper and more reliable than profit-driven insurance. Private health insurance can work, but only if it's tied to a system that is carefully regulated and puts the needs of the patients ahead of the executive bonuses and excessive company profits.

Remember, when private insurance companies were allowed to participate in the Medicare system, a reasonable profit margin was already built in. It was corporate greed in conjunction with a purposeful lack of government oversight that allows private insurance companies to make an additional $140 billion on top of the profits built into the system.

We need to urge members of Congress, like our own Senator Maggie Hassan, to improve the oversight of CMS, by replacing those board members with ties to private insurers with independent, experienced people with medical, legal, and financial backgrounds, and not hire still more people tied to and financially obligated to the very companies they're supposed to oversee.

We can protect taxpayers, our Seniors, and the money that is still left in the Medicare Trust Fund by keeping Medicare as it was initially designed. If the public wants to keep a private, more costly method of Medicare, then the payment process should be completely transparent, the quality and timeliness of service should be monitored, and all profits should be capped. If we are going to cap the taxes on our municipal city budgets, we most certainly should cap the amount of money private insurers take from the public treasury.

For the longest time, Traditional Medicare had been the one healthcare payment system in America that worked the way it was supposed to. If we don't fix it now, there won't be anything left to fix.