Letting private insurance run Medicare Advantage cost us dearly
By Philip Mattera, director of the Corporate Research Project for the Dirt Diggers Digest
Fraud Magazine illustration by Jonathan Bartlett
By Paul Kilby; Illustrations by Jonathan Bartlett
By Paul Kilby; Illustrations by Jonathan Bartlett |
By Paul Kilby; Illustrations by Jonathan Bartlett
Progressive Democrats such as Bernie Sanders have long promoted Medicare for All as the solution to the country’s health insurance problems.
Given the popularity of Medicare among the seniors it serves,
extending the program to other age groups has a great deal of appeal.
The problem, though, is that Medicare is not a single
program. It is an assortment of coverage options that can be bewildering to
those turning 65 and to participants during the open enrollment period each
year when they must decide whether to stick with their current plan or jump to
another. The 2024 open enrollment period began on October 15th and ends
December 7th.
Seniors are currently being bombarded with coverage
offers, not from the federal government, which oversees Medicare, but from the
private insurance companies which have gained a significant foothold in a
nominally public program.
That involvement may take the form of supplemental coverage for the 20 percent of medical costs Medicare does not cover. Prescription drugs coverage, which was not part of traditional Medicare, was added in 2006 through a system that requires most participants to purchase plans from private insurers.
Most problematic is the coverage designated as Medicare Part C, which is more commonly known as Medicare Advantage (MA). Whereas traditional Medicare operates much like the fee-for-service health insurance many Americans receive through their employer, MA is more akin to a health maintenance organization or HMO.
Instead of paying doctors and others for
providing service, MA gives plan providers, which are usually commercial
insurers, a lump sum for each beneficiary. They are then responsible for
managing patient care. Around half of Medicare participants are in MA plans.
MA providers claim that they can offer improved care,
including services such as dental and vision which are not included in
traditional Medicare. They also depict themselves as the solution to runaway
medical costs. To the extent this is true, the MA providers achieve these
results through many of the same ruthless practices that gave HMOs and managed
care a bad name starting in the 1990s.
That means erecting roadblocks to care by limiting
beneficiaries’ choice of providers, requiring prior authorization for many
procedures and refusing authorization at a high rate.
It turns out that MA also fails to deliver on the promise
of reducing healthcare costs for the Medicare program. A recent report from
Physicians for a National Health Program estimates that the way MA’s capitated
system is structured causes taxpayers to overpay the plans at least $88 billion
per year and perhaps as much as $140 billion.
Along with these technical reasons is old-fashioned
fraud. The Justice Department recently announced that
Cigna would be paying $172 million to settle allegations that it
submitted “inaccurate and untruthful” diagnosis codes to the federal government
to inflate risk adjustments and thus boost the MA payments it received.
Cigna is not alone. As shown in Violation Tracker, Sutter
Health paid $90
million to resolve allegations of submitting inaccurate information about the
health status of its MA beneficiaries in order to get its payments increased.
It had previously paid $30
million for similar misconduct.
An analysis last year by the New York Times found that
all but one of the top ten MA providers had been accused by the federal
government of fraud or overbilling.
When we talk of Medicare for All, we need to be clear
that means an extension and ideally an enhancement of traditional Medicare–not
the false promise of Medicare Advantage.
