Friday, February 19, 2010

The Empire Strikes Back, Again

A couple of weeks ago, some health insurance companies got a public relations black eye when news of dramatic premium increases coupled with increased deductibles and decreased coverage. Anthem/Blue Cross in California was the main culprit in California (see my post here). This week, news of increases in premiums for private Medicare policies ("Medicare Advantage") has hit the fan.

From an AP article:

A study to be released Friday by a major consulting firm found that premiums for Medicare Advantage plans offering medical and prescription drug coverage jumped 14.2 percent on average in 2010, after an increase of only 5.2 percent the previous year. Some 8.5 million elderly and disabled Americans are in the plans, which provide more comprehensive coverage than traditional Medicare.

Medicare Advantage plans claim to provide more comprehensive coverage when it comes to medical care and prescription drugs. For that, beneficiaries pay higher premiums. That's only part of the story, however. Medicare has to pay these programs as well, and it costs the government program more for these plans than traditional Medicare. Nice, eh? Last year, the government told the insurance companies offering Medicare Advantage that the reimbursement would be cut, and the insurance companies retaliated this year by going after the beneficiaries' dollars:

"Medicare Advantage plans continue to be paid about 13 percent more than original Medicare," said Medicare spokesman Peter Ashkenaz. "The plans need to explain why these increases are necessary."

Eric Hammelman, a senior Avalere data analyst, said that after the government cut payments to the plans last year, the insurers faced a choice. "They could raise premiums or lower benefits, and what most of them decided to do was raise premiums," he said.

Are the various Medicare Advantage insurers going broke because of skyrocketing medical costs? That's not likely. Remember: these are 'for profit' organizations. The problem is not that they're showing losses, it's that their profits aren't as healthy as they would like. If they were truly losing money, they would get out of the Medicare Advantage program.

I'd be interested in seeing not only the financial statements of these companies for the past five years, but also the salaries and bonuses paid to top executives. I'd also like to hear about any incentive programs involving reduced payments to providers and denial of treatment recommendations which reward claims examiners for "cutting costs."

Of course, all of this would be unnecessary if we had Medicare For All, funded by payroll deductions, but, hey!, that would be too socialistic. Or something.


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