Wednesday, May 21, 2008

Advantage For Whom?

On Monday, Ronni Bennett at Time Goes By pointed out a program I didn't know existed: Medicare Advantage. Citing this NY Times article, Ronni points to yet another move to privatise a government service, one that, on balance, is a heck of a lot more efficient than its counterparts in the sacred market place. The result is that Medicare is spending more money than it needs to when it comes to providing health care to elders:

It first came into existence in 1997, when it was called “Medicare+Choice” and renamed Medicare Advantage in 2003. It is also referred to as Part C. These private plans replace traditional Medicare and often include prescription drug coverage which many traditional Medicare beneficiaries purchase through Plan D, also private coverage for which Medicare is not allowed to negotiate prices.

But there is a big problem with Advantage plans. Medicare pays those private insurers an average of about 13 percent more that it would spend for the same beneficiaries in traditional Medicare.
[Emphasis added]

Given the potential profits to private insurers under this plan, it is no wonder that some have engaged in high pressure and often fraudulent sales practices to sell these private Medicare policies to elders. Now the Bush administration has introduced some regulations to curb some of the more egregious of the hard-sell practices, which, while surprising that BushCo would do anything to rein in any industry, still doesn't address the real problem, the subsidizing of Medicare competitors:

The bottom line is that traditional Medicare beneficiaries are subsidizing the already rich private insurance carriers and that’s on top of the fraud in high-pressure sales tactics involved in many Advantage plans.

An editorial in today's NY Times follows up on the original article (link above) in language almost identical to Ronni's:

The Bush administration has proposed welcome new regulations to curb the deceptive, hard-sell tactics often used to foist private Medicare policies on unwary consumers. Unfortunately, it has been unwilling to eliminate the root cause of the problem: the high subsidies that prop up these plans and make them so attractive to high-pressure marketers.

The worst abuses have been committed by predatory marketers selling the comprehensive policies known as Medicare Advantage plans. The government pays these plans 13 percent more, on average, than the same services would cost in the traditional Medicare program. The subsidies are even more egregious — averaging 17 percent above cost — for the so-called private fee-for-service plans within Medicare Advantage. All told, the unjustified subsidies will cost the government more than $50 billion from 2009 to 2012.
[Emphasis added]

Medicare is facing some challenges in meeting its mandate because of just such fraud and wastefulness. Instead of sending bounty hunters out to challenge the need for post-hip replacement physical therapy, Medicare needs to stop wasting money "propping up" an industry which continues to post high profits across the board and across the country.

$50 billion is a lot of money. It could be put to better use.

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Anonymous Anonymous said...

I belong to an HMO Medicare Advantage plan in Portland, Oregon. I pay a moderate additional fee to the HMO (Kaiser Permanente Northwest) in addition to my fee to Medicare. It is a not-for-profit, which makes a huge difference. There is no insurance company middle-man, and there are no stockholders seeking a profit. The plan has to compete with other local plans to keep premiums low. The savings from efficiency and cost control are plowed back into the plan to keep premiums low. It is highly rated by members and by independent evaluations. This is not some gold-plated service, it is just good care and includes a lot of lower income members. People refer to a "subsidy" as something negative, but in this type of plan the government is simply doing what they should be doing for everyone. This type of plan is only available in certain locations; it should be available everywhere, but to accomplish that will require greater government assistance to bring it about in less populated areas, which is exactly what we are asking for. Short of single-payer, it is the best alternative.

1:11 PM  
Anonymous Anonymous said...

But remember: Kaiser still practices what the industry does: Deny coverage, when they can.

1:33 PM  
Blogger eRobin said...

The House wanted to use that $50B to fund SCHIP but the Senate said no. Delightful.

1:38 PM  
Blogger eRobin said...

Here's a link to a rundown of the House plan from 8/07.

1:40 PM  

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