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  A Banner Week for Big Insurance, Part II: Medicare Advantage
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COMMENTARY:

A Banner Week for Big Insurance, Part II: Medicare Advantage

by James Ridgeway
First published in his blog Unsilent Generation yesterday, 17 September 2009

The so-called Baucus bill is a gift to the insurance industry in more ways than one. As I wrote earlier, it hand-delivers to the private insurance companies a whole new customer base that is government-mandated and government-subsidized. And it offers no competition in the form of a public option.

In addition, the Baucus plan preserves the Medicare Advantage program, which is one of the insurance industry’s most overt rip-offs of the public purse. As most Unsilent Generation readers will know, Medicare Advantage (MA) plans offer managed care run through private insurers, paid for by the federal government. In recent years, MA plans have come under increasing fire for their hard-sell tactics to elderly Medicare recipients, shoddy coverage, and rip-offs of the Medicare system. “Competition” from the private plans was supposed to reduce growth in Medicare spending–but in fact, they cost the government more. Recent estimates say that the government pays 14 percent more for those enrolled in Medicare Advantage vs. those in traditional Medicare. Eliminating these overpayments could save the government $177 billion over the next ten years.

Republicans (and at least one Democrat, Bill Nelson of Florida), are already complaining about the Baucus plan’s proposed cuts to MA plans. But the Baucus plan doesn’t eliminate Medicare Advantage, and might not even do it much harm. It simply introduces a new formula for calculating payments to private insurers who offer MA plans. As Tim Foley writes:

Medicare Advantage plans–private HMOs paid for by the feds at 114% the rate for a regular Medicare beneficiary but with no better health outcomes–would keep their overpayments until 2014, at which point they’d be paid the “weighted average” of all the Medicare Advantage plans combined. In layman’s terms, they’d still be getting paid more than traditional Medicare, albeit possibly less than the 14% extra they get now.

This change is rendered even more meaningless by the fact that the Obama Administration had already announced, back in April, its plans to begin incrementally cutting back on overpayments to Medicare Advantage–something it doesn’t need legislative approval to do.

Nonetheless, the insurance industry is pulling out all the stops to protect every cent they make through Medicare Advantage plans. They spent the spring and summer trying to plant astroturf on the issue by luring old people to “community meetings” (with free lunch and door prizes) where they were encouraged to “join the fight” to save the plans.

Now the insurance industry lobby group AHIP (America’s Health Insurance Plans) is offering up reports claiming that Medicare Advantage plans are especially helpful to the poor and people of color–an idea that has already been widely debunked. Cuts to MA, the report says, will hurt the most vulnerable elders.

In response, Pete Stark, (D-CA), chair of the House Ways and Means Health Subcommittee, issued a statement:

AHIP’s reports attempt to portray taxpayer overpayments to MA plans as indispensable for low-income, minority Medicare beneficiaries, when the opposite is true. These overpayments to private insurers increase premiums for all Medicare beneficiaries to pad the pockets of insurance companies....

Any report commissioned by Jay Gellert – the CEO of HealthNet and Chair of AHIP – should be taken with a healthy grain of salt, especially one claiming that beneficiaries are being helped.  Under his leadership, HealthNet has been fined hundreds of millions of dollars for illegally rescinding people’s health coverage when they get sick.


Born in 1936, James Ridgeway has been reporting on politics for more than 45 years. He is currently Senior Washington Correspondent for Mother Jones, and recently wrote a blog on the 2008 presidential election for the Guardian online. He previously served as Washington Correspondent for the Village Voice; wrote for Ramparts and The New Republic; and founded and edited two independent newsletters, Hard Times and The Elements.

Ridgeway is the author of 16 books, including The Five Unanswered Questions About 9/11, It’s All for Sale: The Control of Global Resources, and Blood in the Face: The Ku Klux Klan, Aryan Nations, Nazi Skinheads, and the Rise of a New White Culture. He co-directed a companion film to Blood in the Face and a second documentary film, Feed, and has co-produced web videos for GuardianFilms.

Additional information and samples of James Ridgeway’s work can be found on his web site, http://jamesridgeway.net.

This article is republished in the Baltimore Chronicle with permission of the author.



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This story was published on September 18, 2009.
 

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