Decoding The High-Stakes Debate Over Medicare Advantage Cuts

[ProSense]

Decoding The High-Stakes Debate Over Medicare Advantage Cuts

By Jay Hancock

Health insurers often try to influence Washington through quiet persuasion in plush offices. To fight potential government cuts for private Medicare plans...The Obama administration has proposed reducing what insurers collect for Medicare Advantage plans — HMOs and PPOs, mainly — that cover about 15 million seniors. (Regular Medicare, which still covers most seniors, pays doctors and hospitals directly.)

The rate change, part of the Affordable Care Act, is the next step in winding down a subsidy that pays Medicare Advantage plans substantially more than what traditional Medicare costs. Proponents say the move will end what they call an industry windfall and pressure insurers, hospitals and doctors to deliver care more efficiently.

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What are the stakes?

The nonpartisan Congressional Budget Office estimates the health law would reduce Medicare Advantage payments by $156 billion over a decade. In February the Department of Health and Human Services announced tentative cuts that most analysts calculated to be around 5 percent, which would reduce insurer payments by $7 billion next year alone.

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Why do insurers say more Medicare Advantage cuts would hurt seniors?

The extra 6 percent that Medicare Advantage costs taxpayers compared with traditional Medicare pays for things that benefit members such as gym memberships, care coordination and better health outcomes, insurance executives say.

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Did last year’s changes hurt Medicare Advantage’s popularity?

No. Medicare Advantage membership grew 9 percent last year. Nearly 100 percent of beneficiaries have the option of choosing a Medicare Advantage plan where they live...some carriers withdrew from some markets, others expanded. The number of Medicare Advantage plans stayed about the same from 2012 to 2013, according to the Medicare Payment Advisory Commission.

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Do Medicare Advantage plans really offer higher-quality care?

Evidence is mixed. Some studies show higher clinical quality on several measures and more appropriate use of procedures. Other research suggests that results for Medicare Advantage plans seem better only because gym memberships and other perks attract members who are substantially younger and healthier.

- more -

http://www.kaiserhealthnews.org/Stories/2014/April/07/Decoding-The-High-Stakes-Debate-Over-Medicare-Advantage-Cuts.aspx

Medicare Advantage and the ‘Theft’ of $156 Billion

By UWE E. REINHARDT

In a Dec. 27 lead editorial, “Government Advantage,” the editorial writers of The Wall Street Journal wrote:

Amid the larger ObamaCare meltdown, seniors are discovering their choices are fewer, costs higher and coverage poorer too. Liberals fear the increasing popularity of Medicare Advantage, and they’re starting to gut this market alternative to their original health care entitlement before the sand runs out on President Obama’s second term. About 14 million people or 28 percent of Medicare beneficiaries choose Advantage over the government option, which is why the Affordable Care Act steals about $156 billion from the program – even as enrollment has surged 30 percent since 2010.

A theft of $156 billion should catch one’s attention, especially if government is the thief. It warrants a closer look...what is the time frame of this $156 billion “theft”? Greater clarity on this point would have been helpful, lest readers think that this is an annual figure. In fact, it is the sum of projected future annual cuts off projected future total payments to Medicare Advantage plans over the decade 2013-2022 (see line 8 of Table 2, page 5 in this Congressional Budget Office projection).

That point aside, what the Affordable Care Act has done to the Medicare Advantage plans lies, like beauty, in the eyes of the beholder.

The story begins with the Medicare Prescription Drug Improvement and Modernization Act of 2003, which revamped the manner in which Medicare paid private health plans for Medicare beneficiaries who chose them in lieu of traditional Medicare. The program, called Medicare Risk when it was established in 1982 and rechristened Medicare+Choice in 1997, was reborn as Medicare Advantage.

I described and discussed the complicated administrative payment algorithm prescribed for Medicare Advantage by that law in a previous post. Those interested in the modus operandi of the payment system for Medicare Advantage before the Affordable Care Act of 2010 can read an official description by the Medicare Payment Advisory Commission of Congress (known as Medpac), dated October 2008. A description of the current payment system is also available...on average, the payment method prescribed by the 2003 law, which took effect in 2006, has cost taxpayers substantially more per Medicare beneficiary who enrolled in a Medicare Advantage plan than these beneficiaries would have cost taxpayers in traditional Medicare. That is because Medicare has paid private plans more per beneficiary than these beneficiaries would have cost in traditional Medicare.

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http://economix.blogs.nytimes.com/2014/01/03/medicare-advantage-and-the-theft-of-156-billion

Typical Republican scam: Undermine Medicare by diverting a substantial amount of Medicare funds to private insurance.

While the WSJ is attempting to push this bogus claim, the health care law also strengthened Medicare.

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MEDICARE’S FINANCIAL CONDITION

Medicare’s financial condition is measured in several ways, including the solvency of the Part A Trust Fund, the annual growth in spending, and growth in spending on a per capita basis. Average annual growth in total Medicare spending is projected to be 6.6% between 2010 and 2019, but 3.5% on a per capita basis (assuming no reduction in physician fees).

The Part A Trust Fund is projected to be depleted in 2024— eight years longer than in the absence of the health reform law—at which point Medicare would not have sufficient funds to pay full benefits, even though revenue flows into the Trust Fund each year. Part A Trust Fund solvency is affected by growth in the economy, which directly affects revenue from payroll tax contributions, and by demographic trends: an increasing number of beneficiaries, especially between 2010 and 2030 when the baby boom generation reaches Medicare eligibility age, and a declining ratio of workers per beneficiary making payroll contributions (Figure 4).

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http://www.kff.org/medicare/upload/7305-06.pdf

[ProSense]

1. Note the irony

A new paper by economists from the University of Pennsylvania's Wharton School finds that the higher rates HHS pays for Medicare Advantage contribute more to insurer profits and advertising spending than consumer benefit.

Insurers according to the OP piece are about to spend millions on an ad campaign to fight the change.

...Wendell Potter said it may be the biggest insurance publicity campaign since the “Harry and Louise” ads, which helped undermine the Clinton administration health-reform effort in the 1990s.

[tiredtoo]

2. As a recipient of Medicare

That also has Medicare advantage.
I am totally confused. Signed up for this years ago and still have no idea if it is an advantage to me or just more profit for the insurance companies.
I am afraid to drop it but can find no reliable advice regarding the results of having or not having it.

[ProSense]

4. It's confusing

"That also has Medicare advantage.
I am totally confused. Signed up for this years ago and still have no idea if it is an advantage to me or just more profit for the insurance companies.
I am afraid to drop it but can find no reliable advice regarding the results of having or not having it."

Here's some information that might help.

Differences between Original Medicare and Medicare Advantage Plans
http://www.medicarerights.org/fliers/Medicare-Advantage/Differences-Between-OM-and-MA.pdf?nrd=1

http://www.medicare.gov/supplement-other-insurance/medigap/medigap-and-medicare-advantage/medigap-and-medicare-advantage-plans.html

http://www.medicare.gov/sign-up-change-plans/medicare-health-plans/medicare-advantage-plans/medicare-advantage-plans.html

It's time to expand Medicare and drop these private plans. It's also necessary if Medicare for all is a goal.

[tiredtoo]

15. Thanks for the links

I did look at them. currently am paying close to $500 a month for myself and wife. I have COPD O2 24/7. my understanding is Medicare would not pay total cost for this O2, so i am paying for Medicare advantage. do not have any copays but do have on prescription drugs. No dental or eye insurance. Prescription drug coverage is an extra $50 or so a month for wife and me. and er are paying a couple hundred to Medicare out of SS checks.
not sure if this is the best plan for me.
Insurance company takes automatic withdrawals from my checking account and just stopping that is a monumental task.

[ProSense]

16. You're welcome.

Sorry to hear about your condition. That's a lot of money after reaching Medicare. I wish I could offer better advice, but have you tried contacting CMS?

[sunnystarr]

19. I have the regular Medicare

and also have COPD. I'm not familiar with Advantage. Medicare covers 80% and I have a supplemental that covers the other 20%. I've never paid for anything out of pocket with the exception of my monthly premiums. O2 is always covered 100%, just as anything like albuterol for my nebulizer. My 02 converter (or whatever you call it) is also covered 100%. When I started my supplemental it only cost me $70 a month. I was 65 then and now at 70 it's climbed to a little over $200 a month. Medicare is a little over $100 a month, not sure without looking it up since it's taken out of my SS every month. For my supplemental I have Plan F which covers the most and is of course the most expensive. Since I have no other income, it's important to me to be covered 100%. I have Part D for drugs but I mainly use Advair at a $42 per month co-pay and a few other low cost ($4.00) Rx's at times.

I've had many hospitalizations prior to last year. Four just in the Fall of 2012. I finally hit on the winning formula to avoid the respiratory infections that came with the slightest cold and which almost took my life in 2012. 16 months and counting is heavenly for me!

[tiredtoo]

20. My experience runs parrallel to yours

Only difference is i am about 3 years older than you and have not suffered with severe colds. My supplemental insurance jumped but not as much as yours. I also have plan F. If you check you will probably find your supplemental is a Medicare Advantage program. as versus a Medigap program. I get a flu shot every fall and a pneumonia shot once every five years. So far i have not had any excessive colds. I am currently taking Spiriva and Symbocort with abuteral for emergency use. Wishing the best for you. And thanks for all the replies from you and others here.

[pscot]

5. I hit a rough patch a few years back

I was hospitalized several times over the course of about 2 years including 11 days in a critical care unit. My total expenses for all that came to $0 because I had a Medicare supplement plan through Group Health. My wife and I pay $270 a month. I have a small copay for meds, but I've never had to deal with a hospital or doctor bill. I think it's money well spent.

[ProSense]

7. That's

"I was hospitalized several times over the course of about 2 years including 11 days in a critical care unit. My total expenses for all that came to $0 because I had a Medicare supplement plan through Group Health. My wife and I pay $270 a month. I have a small copay for meds, but I've never had to deal with a hospital or doctor bill. I think it's money well spent."

...insurance at work. You're paying a premium, which makes it all the more absurd that Medicare should be subsidizing private insurers. If anything the subsidies should be going to seniors who can't afford the supplemental premiums.

Better yet, expand Medicare. It's cheaper and more cost efficient.

[jwirr]

8. I also have the Advantage - had medicare waiver for years and I see not difference. I agree we need

more imfo on how to get safely out of these programs.

[ProSense]

9. People need

"I also have the Advantage - had medicare waiver for years and I see not difference. I agree we need more imfo on how to get safely out of these programs."

...to start talking about the millions of seniors that are held captive by private insurers even though they're on Medicare.

[jwirr]

12. Social Security should add a letter about this to the next "This is Not a Bill" handout. But since

they will not I think I am going to write a letter to the WH, my senators and rep. This is ridiculous.

[ProSense]

17. It is beyond "ridiculous" that more people aren't speaking out against this. n/t

[Coventina]

3. In yesterday's paper, a columnist was whining that his Medicare Advantage plan now only accepts one

local hospital chain.

He said if that one gets dropped, he'll have to see a veterinarian.



This is the kind of idiot propaganda we're up against.

[ProSense]

6. These insurers

"In yesterday's paper, a columnist was whining that his Medicare Advantage plan now only accepts one local hospital chain."

...manipulate and whine, and it's all profit-driven. Anything that cuts into their excessive profits is used as a reason they have to cut services. The media spends all their time pushing negative stories about Medicare. How often do they report on Medicare Advantage dropping services?

Yet while these insurers are whining, they're spending millions on their misleading claims.

There is no reason for the government to subsidize insurance companies, which is what these extra payments are.

[bemildred]

10. Insurance companies suck and I don't want them anywhere near my health care on any terms. nt

[ProSense]

11. Private insurers' grip on seniors mostly gets the spotlight as a benefit

The media rarely focuses on how these programs are milking Medicare funding to boost private insurers' profits.

[jwirr]

13. Not only do we have to sign up for some kind of insurance program such as Hummana for Medicare

but then that insurance company tells us that Medicare Advantage is cheaper. So they get us coming and going. I would much rather go back to the straight Medicare program without any insurance plans. Medicare is touted as a single payer plan - not anymore. It has changed drastically and it did it before ACA. In fact it changed before President Obama.

[ProSense]

14. Yup, and

"Not only do we have to sign up for some kind of insurance program such as Hummana for Medicare but then that insurance company tells us that Medicare Advantage is cheaper."

...$15.6 billion a year in overpayments to insurers plus premiums paid by seniors could easily be saved or drastically reduced by expanding Medicare.

[ProSense]

18. Kick! n/t