The cost
disadvantage of "Medicare Advantage"
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The struggle in Congress over whether the government overpays Medicare
Advantage plans (sometimes referred to as Part C) is really a struggle
over the future of Medicare itself and whether there will be a future
for publicly supported universal health coverage.
I know, many of you have a Medicare Advantage plan (an HMO or PPO) and
want to hang onto it. For the price of a Part B premium, and, in some
cases, a Part D premium, and maybe a little more, you have medical,
hospital and drug coverage you're comfortable with, and it's all in one
convenient policy, with one insurer.
If you were lucky, your doctors, labs, hospitals and other medical
facilities that you use are in your plan's network. And although the
referrals can be a bother and the co-pays add up, it seems less
expensive and less complicated than having separate coverage from
traditional Medicare, a Medigap policy and a Part D drug plan. That's
why 8.3 million Medicare beneficiaries have left Medicare for a Medicare
Advantage plan.
So what's the problem? Why are so many Democrats in Congress and health
care advocates unhappy with Medicare Advantage? One big reason is the
cost. On average, according to the Medicare Payment Advisory Commission
(MedPAC), Medicare pays the Advantage plans 12 percent more per patient
than it pays for traditional fee-for-service Medicare.
This is an excellent piece for those considering changing from Medicare
to Medicare Advantage.
See complete article
HERE.
Medicare Advantage is
essentially Medicare contracted out to private HMOs. It would not be
my first choice, and wasn't, and according to this article and other comments
I've received back it is not a good choice at all. Clearly, if the
Advantage contractors had to abide by
the same guarantees of care that Medicare does, and it were not
12.5% more costly, it might be suitable. But I am terribly bothered
that they divert part of their health care dollars to advertising,
and certainly must be spending some on actuarial costs. I prefer the
simple Medicare coverage: You get sick, you get care, and WPS pays
the bill on behalf of the government.
I'll be writing more
specifically on the disadvantages of "Advantage" in the future.
Here are two very excellent
articles by Ezra Klein:
Online:
Cost Counts Why progressives should learn to love cost-sharing
in health care.
Print copy only:
The Health of Nations -- Here's how Canada,
France, Britain, Germany, and our own Veterans Health Administration
manage to cover everybody at less cost and with better care than we do.
Medicine may be hard, but
health insurance is simple. The rest of the world's industrialized
nations have already figured it out, and done so without leaving 45
million of their countrymen uninsured and 16 million or so underinsured,
and without letting costs spiral into the stratosphere and severely
threaten their national economies.
Even better, these successes are not secret, and
the mechanisms not unknown. Ask health researchers what should be done,
and they will sigh and suggest something akin to what France or Germany
does. Ask them what they think can be done, and their desperation to
evade the opposition of the insurance industry and the pharmaceutical
industry and conservatives and manufacturers and all the rest will leave
them stammering out buzzwords and workarounds, regional purchasing
alliances and health savings accounts. The subject's famed complexity is
a function of the forces protecting the status quo, not the issue
itself.
So let us, in these pages, shut out the political
world for a moment, cease worrying about what Aetna, Pfizer, and Grover
Norquist will say or do, and ask, simply: What should be done? To help
answer that question, we will examine the best health- care systems in
the world: those of Canada, France, Great Britain, Germany, and the U.S.
Veterans Health Administration (VHA), whose inclusion I'll justify
shortly.
(This is at the newsstands now, and has a
picture of Rudy Giuliani on the cover.)
April 21, 2007
Editorial
The Medicare Privatization Scam
If private health plans are supposedly so great at delivering
high-quality care while holding down costs, why does the government
have to keep subsidizing them so lavishly to participate in the
Medicare program?
About a fifth of elderly Americans now belong to private Medicare
Advantage plans, which — thanks to government subsidies — often
charge less or offer more than traditional Medicare. As Congress
struggles to find savings that could offset the costs of other
important health programs, it should take a long and hard look at
those subsidies.
The authoritative Medicare Payment Advisory Commission estimates
that the government pays private plans 12 percent more, on average,
than the same services would cost in the traditional Medicare
fee-for-service program. The private plans use some of this money to
make themselves more attractive to beneficiaries — by reducing
premiums or adding benefits not covered by basic Medicare — and
siphon off the rest to add to profits and help cover the plans’ high
administrative costs.
Although the insurance industry insists that the subsidies are
much lower and are warranted by the benefits provided, Thomas
Scully, who headed the Medicare program for the Bush administration
until 2003, told reporters recently that the subsidies were too
large and ought to be reduced by Congress.
The largest private enrollment is in health maintenance
organizations, which typically deliver care a bit more cheaply than
standard Medicare and should not need their 10 percent subsidies, on
average, to compete. The biggest subsidies — averaging 19 percent
above cost — go to private fee-for-service plans, which are the
fastest-growing part of the Medicare Advantage program. Unlike the
H.M.O.’s, which at least manage a patient’s care and bargain hard
with doctors and hospitals, these plans ride on the coattails of
standard Medicare, typically providing access to the same doctors
and paying them at the same rates. Thanks to the big subsidies they
get, such plans are often a good deal for beneficiaries, charging
less for the same benefits or adding benefits without raising
prices.
The main losers are the beneficiaries in the standard Medicare
program, whose monthly premiums are roughly $2 higher to help pay
for the subsidies, and the taxpayers who pick up part of the tab.
The subsidies also erode the long-term solvency of Medicare, which
needs to rein in costs, not increase them with handouts to insurance
companies.
When the Democrats first won control of Congress, it seemed
possible that they might eliminate the subsidies — saving some $54
billion over five years — to finance a $50 billion expansion of a
health insurance program for low-income children. But the insurance
industry has mounted a furious lobbying campaign to head off any
cuts.
Congress ought to eliminate the subsidies completely unless it is
willing to subsidize the same benefits — at enormous cost — for the
far greater number of people enrolled in standard Medicare. It is
time to level the playing field and force private plans to really
compete with traditional Medicare.
The NYT is
absolutely correct. Taxpayers are paying 12.5% more for Medicare
Advantage than for the original Medicare, and to a private insurance industry with the
freedom to deny care when a member's costs get too high. That is,
when they are very sick and need it the most.
Medicare Advantage
is useful for only one purpose (and that's even questionable), to feed money to the insurance
industry temporarily while we transition to a Medicare-for-all
system. But the insurance industry will continue its $50 million in
campaign contributions to keep Advantage alive. Whether your
congressman is on the take or not, CALL him or her and let them know
that Advantage is not an acceptable alternative.
Contrary
to the views of some pundits, sweeping Republican losses at the
polls last November did not signify a repudiation of
conservatism. “Republican” is not always synonymous with
“conservative” and the divergence between the two has been
spotlighted in recent years for American voters to see.