There is an ongoing plot by the insurance industry lobby and some members of Congress to eventually privatize the entire Medicare program and change it from a defined benefit to a defined contribution plan.
If this happens, it would eliminate the Traditional Federal Medicare guaranteed program causing extreme hardships to the elderly and poor who live on fixed incomes.
Traditional Medicare was created by Congress in 1965 as a single payer entitlement for all to protect seniors from catastrophic medical expenses during their retirement years. It provides a specific defined guaranteed benefit when needed.
With a defined contribution, seniors would receive a fixed Federal amount to apply for the purchase of private insurance before benefits are consumed.
Some believe premium support will reduce Medicare’s cost, but the facts show costs will be shifted from the Federal government to the beneficiaries because a Federal voucher loses its value over time due to inflation requiring insurers to increase premiums or co-pays.
“The Congressional Budget Office (CBO) estimates the current Ryan proposal would more than double out- of- pocket costs of a typical 65 year old Medicare beneficiary in 2022 from $5,630 to $12, 500,” said Dr. Ida Hellander in a January 15, 2017 updated issue of Health Care Now.
Private Medicare Advantage (MA) plans profit by “cherry picking” their markets enrolling the healthy and shunning the sick as documented in a New England Journal of Medicine article subtitled, “The healthy go in and the sick go out.”
MA plans are designed and marketed to return a profit to their investors by using various techniques to offset their high administrative costs. One way is to use their own representatives, and not health care providers to make home visits (called up coding), to make patients appear sicker than they really are which qualifies the plan for higher payments than warranted from the Federal government.
MA plans cost Medicare about 12 percent more per enrollee than the Traditional program, but the National Bureau of Economic Research says the true cost could be in the 16 to 24 percent range.
The Medicare Modernization Act of 2003 authorized generous overfunding to MA insurance carriers to help them attract new members by offering free gym club memberships, zero premiums, including dental and vision benefits, but did not provide additional funding to members in the Traditional Medicare program.
Why would Congress look the other way and keep overfunding the MA program when the CBO has estimated the administrative costs on the private side of MA in 2022 are projected to be in the 40 percent range as opposed to Traditional Medicare’s two per cent?
The bi-partisan Medicare Payment Advisory Commission (Med Pac) took notice of the disparity in funding with Traditional Medicare members and urged Congress without much success back in 2009, to reduce the overpayments to MA plans because there was no evidence that better care was being provided.
In fact, Med Pac reported the insurance companies were using much of the overfunding allocation for administrative expenses and profits.
The Affordable Care Act (ACA) of 2010 made an attempt to level the playing field by passing legislation to significantly reduce the overfunding to insurance companies selling MA plans by about $156 billion over a ten year period.
But this legislative cutback was immediately challenged by America’s most powerful health Insurance lobby. The America’s Health Insurance Plans (AHIP) lobby represents the interests of more than 1300 companies who sell health insurance.
AHIP sprung into action by creating a front group called the Coalition for Medicare Choices, (CMS) that labels itself as a grassroots MA organization with 2 million members, but is a project of AHIP and shares the same physical address at 601 Pennsylvania Avenue N.W. Suite 500, in Washington D.C.
A nationwide fear mongering campaign was launched by AHIP in 2016 using heavy intimidation directed toward members of Congress under the headline, “Seniors are Watching.”
T.V. commercials were used urging Congress to “Stop the new cuts” while asking millions of their MA members to call their legislators. MA Member now believed the ACA was cutting their benefits.
The overfunding dollars to MA providers were subject to cuts, but AHIP did not tell their members there were no guaranteed benefits cut under ACA legislation for MA members. Not telling the whole story is referred to as spin or “Fake News Reporting” which is how lobbying campaigns usually work.
Lobbyists know how to twist the arms of Congress to get their way.
During February of 2016, 369 members of Congress (61 senators and 308 House members) signed letters addressed to Andrew Slavitt, acting administrator for CMS asking to “establish payment and regulatory policies for 2017 that avoid further payment cuts to the MA program.”
The congressional recommendation was approved by CMS In April and the MA plans were awarded a 3.55% increase for 2017 just like the previous increases received during 2014 and 2015 using the same intimidation tactics.
Watch the news in February 2017 as AHIP’s 2 million MA foot soldiers’ coalition strong arm members of Congress once again to keep the current “crony capitalism” funding arrangement intact for 2018 to benefit the insurance industry.
I’m sure the increased funding to MA will happen again as planned since the new President and CEO of AHIP is Marilyn Tavenner, the former Administrator of (CMS) Centers for Medicare and Medicaid Services.
I doubt we will see any outrage by Traditional Medicare members because very few know this ongoing conspiracy is even happening.
