By Robert Pear
The New York Times, December 1, 2018
Older Americans have been flocking to Medicare’s private plans, which promise predictable costs and extra benefits.
But the private Medicare Advantage plans have also been getting an unpublicized boost from the Trump administration, which has in the last few weeks extolled the virtues of the private plans in emails sent to millions of beneficiaries.
The officials deny that they are steering patients to private plans, but the subject lines of recent emails read almost like advertisements. “Get more benefits for your money,” says a message dated Oct. 25. “See if you can save money with Medicare Advantage,” said another sent a week later.
“You may be able to lower your out-of-pocket costs while getting extra benefits, like vision, hearing, dental and prescription coverage,” said an email sent to beneficiaries on Wednesday.
“With Medicare Advantage,” says another email, “one plan covers all of your care.”
Seema Verma, the administrator of the Centers for Medicare and Medicaid Services, said the agency was not favoring private plans over the original government-run Medicare program.
“We are not steering any Medicare beneficiary anywhere,” she said.
But Richard S. Foster, who was for many years the nonpartisan chief actuary of the Medicare program, said the emails sounded “more like Medicare Advantage plan advertising than objective information from a public agency.”
Medicare Advantage Checkup
By Patricia Neuman, Sc.D., and Gretchen A. Jacobson, Ph.D.
The New England Journal of Medicine, November 29, 2018
The emerging role of Medicare Advantage, the private-plan alternative to traditional Medicare, is gradually changing the Medicare program in ways that have important implications for beneficiaries, providers, and spending. Fueled by policy changes adopted by both Democrats and Republicans, enrollment in Medicare Advantage plans has more than tripled since 2005, from approximately 6 million to 20 million beneficiaries.
Policymakers have articulated a number of goals for having private plans in Medicare, one of which is to provide beneficiaries access to extra benefits not available in traditional Medicare. Thanks to a number of policy and payment changes adopted over the years that have not only required plans to offer a richer set of benefits to their enrollees but also offered incentives for plans to do so, this goal has generally been achieved. Since 2011, the Centers for Medicare and Medicaid Services (CMS) has required all Medicare Advantage plans to provide out-of-pocket limits for Medicare-covered services.
Medicare payment policy requires plans to use “rebate” dollars to provide enrollees enhanced benefits or lower premiums (allowing plans to keep a portion to cover administrative costs and profit). Rebates accrue when a bid submitted by a Medicare Advantage plan for Medicare-covered benefits is below the “benchmark” (the maximum federal payment to plans in that geographic area); the federal government keeps a portion of the excess and remits the remainder (the rebate) to the plan. As a result of rebates, most Medicare Advantage enrollees receive benefits not covered by traditional Medicare.
Studies suggest that the current rebate-based method may not be an economically efficient way of providing extra benefits to beneficiaries because plans are retaining a fairly large share of the rebate for administrative costs and profit, passing on to enrollees only 54% of the rebates, on average.
Medicare has evolved into a program that provides benefits that are more generous to beneficiaries in Medicare Advantage plans than to their counterparts in traditional Medicare.
Discussion
Medicare Advantage plans are now firmly established in the fabric of Medicare. Under the assumption that Medicare Advantage enrollment will continue to climb, the Medicare of tomorrow could look much different than it does today — more like a marketplace of private plans, with a backup public plan, and less like a national insurance program. This may or may not be the program that people envision when they talk about Medicare for All.
Policymakers, both Democrats and Republicans, are generally supportive of Medicare Advantage plans because they are popular with their constituents. More and more seniors are signing up for Medicare Advantage to get the extra benefits, the financial protection of an out-of-pocket limit, and the convenience of one-stop shopping for all their coverage. Despite the substantial reductions in federal payments to plans required by the ACA, health insurers have been growing their Medicare Advantage lines of business and new insurers are breaking into the Medicare Advantage market, which suggests that it remains among the more lucrative health insurance products.
Yet, several issues are on the horizon. The current payment environment that attracts insurers and provides extra benefits to enrollees comes at a cost to taxpayers and may reemerge as an issue down the road, when federal spending becomes a more pressing policy concern. The equity issue that arises from providing stronger financial protections, with an out-of-pocket limit, for beneficiaries in Medicare Advantage than in traditional Medicare could also gain traction as an issue, particularly as seniors’ out-of-pocket spending continues to rise. With respect to quality, the wide variation across plans, a paucity of data pertaining to sicker patients, and eyebrow-raising disenrollment rates among higher-need patients appear to warrant attention and oversight. Still to be determined is how the growing role of private insurance in Medicare, and the diminishing role of traditional Medicare, is likely to affect beneficiaries’ out-of-pocket spending, satisfaction, and health outcomes over time.
Reforming America’s Healthcare System Through Choice and Competition
U.S. Department of Health and Human Services, U.S. Department of the Treasury, U.S. Department of Labor
When it comes to healthcare, Americans should expect more value for the dollars they spend. This report details many opportunities to increase the value provided throughout our healthcare system through the actions that create greater choice and competition.
For the full 114 page report:
https://www.hhs.gov…
Comment:
By Don McCanne, M.D.
The NYT article describes CMS’s efforts to market the private Medicare Advantage plans in an effort to displace the traditional, government-run Medicare program, although CMS Administrator Seema Verma denies that they are favoring the private plans. That is a difficult assertion to accept in the face of their marketing efforts.
The NEJM article confirms that the government has continued to give the private Medicare Advantage plans a marketing edge over the traditional Medicare program by granting the private plans greater benefit packages and especially the extra financial protection of limitations on out-of-pocket costs.
The report from the Departments of HHS, Treasury, and Labor confirms that the current administration is dedicated to the ideological goal of using choice and competition in the private marketplace as a basis for reforming America’s health care system. The gradual transformation of Medicare into a market of private health plans is evidence of the support for privatization of Medicare. However this is not new since the neoliberal players in the Obama and Bush administrations were already advancing the private Medicare Advantage plans.
Under a Single Payer Medicare for All program, private plans are eliminated, leaving in place only a single publicly-financed and publicly-administered program. The adherence to market choice and competition ideology is sending us in the opposite direction, shifting control to a market of private health plans.
The people are going to have to lead, but not through exclusive alignment with either the Democrats or the Republicans. The Choice and Competition report shows where the Republicans stand, but many of the Democrats who claimed they supported Medicare for All are now indicating that they want to preserve the individual and employer-sponsored private health plans while merely adding a public option with a deceptive Medicare label. That’s no solution.
No, we the people are going to have to join together across party lines and take a firm, unified stand, telling all of our politicians that we want health care for everyone. Do you think we can pull that off? I mean, it’s for our health – all of us.
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