By Kip Sullivan
The Minnesota Star Tribune, Letters, Dec. 18, 2024
I really appreciated Jill Burcum’s column on the jaw-dropping overpayments to so-called Medicare Advantage plans (“Will Musk have the guts to take on insurers?” Strib Voices, Dec. 15). Donald Trump’s unofficial budget cutters, Elon Musk and Vivek Ramaswamy, should immediately focus on eliminating those mammoth overpayments. Burcum reported that the Medicare Payment Advisory Commission (MedPAC) estimated that Medicare Advantage insurers are overpaid by 22%, far more than they need to cover their 15% overhead and make a buck without delaying and denying health care, which they do with gusto.
Sad to say, MedPAC’s estimate, as shocking as it is, is way too low. MedPAC took into account only two factors that create overpayments — favorable selection and upcoding. MedPAC estimated favorable selection (enrolling healthier-than-average beneficiaries) raised payments by 9%, and upcoding (adding false or inappropriate diagnoses to patient medical records to make them look sicker) added another 13% (for a total of 22%). Four other factors — favorable deselection (sicker people leaving Medicare Advantage and returning to the original Medicare program), bonuses for scores on a worthless “quality measure,” pointless bonuses for selling insurance in rural counties, and an “induced utilization” subsidy that is too complicated to explain here — raise the overpayments to about 40%. Forty percent overpayment translates into about $150 billion in excess payments in 2024. To put that sum in context, consider that the Congressional Budget Office estimates that adding dental, hearing and vision coverage to traditional Medicare would cost roughly $80 billion annually.
Kip Sullivan is a member of the Health Care for All Minnesota policy committee.
