By Marvin Malek, M.D., M.P.H.
VT Digger, November 30, 2021
In 1938, the notorious bank robber Willie Sutton was asked why he robbed banks. His response: “That’s where the money is.”
Were Willie Sutton alive today, he wouldn’t rob banks. He’d start a Medicare Advantage plan. If he did so, he wouldn’t have to face the risk of incarceration, and the booty would not be a one-time affair, but would instead continue to accumulate year after year.
Contrary to what we’ve been told by the Medicare administrators, Covid was not the main cause of the record 15% increase in Part B premiums announced this month, and will not be reversed in two years when Covid will likely have settled down. Instead, it is the corporate welfare program known as Medicare Advantage and its stealth sibling, the Direct Contracting Entity, that are depleting the trust fund and thereby prompting the higher premiums.
Due to the dominance of a neo-liberal mindset for most of the last 40-plus years, Medicare, the crown jewel of Lyndon Johnson’s Great Society, has turned into a feeding frenzy for private insurers and venture capital entrepreneurs.
During every single one of the 25-plus years since Medicare began outsourcing the Medicare benefit to Medicare Advantage HMOs, the taxpayers have lost money, paying the private plans more than it would have cost Medicare to simply insure these individuals directly through the Medicare program.
HMO/insurers have always been adept at picking off healthy seniors to insure, doing their best to avoid insuring patients with cancer, Alzheimer’s and other expensive illnesses. When this abuse received so much publicity that it became embarrassing, the Center for Medicare and Medicaid Innovation initiated a complex risk adjustment methodology to counter this “cherry picking” of healthier seniors.
But in the ultimate game of Whac-A-Mole, the scheme to prevent private-sector HMOs from bilking Medicare has led to even greater overpayments to the private companies. They still try to pick off healthy people, but have now made a science out of “upcoding” — gaming the risk adjusters to make their enrollees appear to be harboring horrendous chronic illnesses — even their enrollees who appear to be perfectly healthy.
While a beneficiary without risk adjustment will yield these insurers a payment from Medicare of $4,000 a year, Medicare would pay $19,800 for a patient with major depression, morbid obesity and a Stage 3 foot ulcer — year after year! It wouldn’t seem that there is much incentive from the insurers’ point of view to treat the depression, promote weight loss and get the ulcer healed.
The Medicare Trust Fund loses billions on this dysfunctional policy every year — but Wall street investors think the scheme is fabulous.
The overpayments are so great that now most Medicare Advantage plans have the funds to charge only modest premiums or none at all, and provide a small dental and vision benefit not present in traditional Medicare — and, as we’ve seen even more this year than previously, spend millions on advertising.
Don Berwick, M.D., a past director of the Medicare program, correctly characterized it as a money machine. But despite these enticements, the majority of Medicare beneficiaries know that when something seems too good to be true, it probably isn’t true: Medicare Advantage enrollees who actually get sick quickly rack up significant bills. And even if they have an unusual illness, they are forced to stay within the plan’s network of doctors even if an outside specialist is called for.
They won’t have expensive drugs covered if the plan feels that a less expensive drug would be a good alternative (good for the insurance plan, that is), and have to worry that their doctor may lose a preauthorization battle if the insurance company decides a test or treatment the doctor ordered isn’t really necessary.
And if they want to get out of the Medicare Advantage program and return to traditional Medicare with a supplemental plan, the plan is permitted to raise your premium indefinitely, or even refuse to insure you altogether.
So it isn’t surprising that 93% of retired doctors choose to remain within traditional Medicare with a supplemental plan rather than opt for a Medicare Advantage plan. And it isn’t surprising that, during the final year of life when patients almost always face complex medical problems, patients are 10 times more likely to leave a Medicare Advantage plan than try to get into one.
But over just the last two years, Medicare’s administrators have transcended the wasteful stupidity of the last three decades and embarked on a path that can rightfully be regarded as outrageous.
They have decided to auction off traditional Medicare to private plans.
Don’t be deceived by the innocuous term they’re using for these companies: “Direct Contracting Entities.” They’re the same old HMO insurer and venture capital companies with which we’re all familiar: Humana, Cigna, United Health Care, etc. They go from one primary care practice to the next, offering to pay doctors to join their DCE network and allow the insurer to “coordinate” the care they give to the doctors’ entire panel of patients.
Medicare beneficiaries who want nothing to do with a Medicare Advantage plan are paying more up front — approximately $2,000 per year for a supplemental plan and drug coverage — specifically to avoid the intrusion of HMO/insurers into their health care. The Medicare program is now making these people “covered lives” in the Direct Contracting Entity’s networks without even bothering to tell them.
The DCE program was cooked up by a team of harebrained bureaucrats in the Medicare bureaucracy with encouragement from ecstatic insurance company lobbyists eager to take advantage of yet another scheme to bilk the taxpayers for years to come. It will surprise no one when, after this novel corporate welfare program is fully implemented in a few years, the protagonists in the Medicare bureaucracy who concocted this outrage will abandon their jobs in the Medicare program, and find themselves earning six-figure compensation packages at the very insurance companies to which they just handed over the Medicare program.
The stated rationale of the bureaucrats who create these privatization schemes is to eliminate the incentive of the fee-for-service system to overtreat. Unfortunately, all the strategies they devise — without exception — add so much administrative cost that they have the perverse effect of actually increasing total system cost.
High-functioning health care systems internationally do this by using negotiated global annual budgets for hospitals. Other highly effective cost-control strategies are also available, but never seem to gain the attention they deserve: Creating a single software system and providing it to every hospital and doctor in the country free of charge would facilitate information flow and eliminate duplicative testing, creating a national online marketplace of available short- and long-term positions, and lowering malpractice costs would all effectively reduce system cost.
And the most potent of all would be to bring every American into an improved, unprivatized Medicare program with minimal or no out-of-pocket costs.
Rather than costing more, the reduced administrative expense and ability to negotiate down prices of drugs, devices and other system inputs could by itself reduce costs by 15 to 20%. And it would have another impact: It would eliminate the immense financial and physical suffering Americans endure by being priced out of accessing health care.
This “Direct Contracting Entity” scheme began during the final year of the Trump administration, and most observers thought it would be ditched by the Biden administration. But that didn’t happen.
It is time for every concerned American to act. The Medicare program should be enhanced, not fed to ravenous HMOs and venture capital groups or there may be very little left of it in another decade. Medicare must stop wasting our money on privatization schemes.
Contact Sens. Sanders and Leahy and Rep Welch and tell them:
- Enhance the Medicare benefit to eliminate its unaffordable deductibles and copays and add coverage for eyeglasses, hearing aids and a dental benefit for every single beneficiary, not only those who gamble their health on risky Medicare Advantage plans.
- Stop the overpayment of Medicare Advantage plans. And eliminate the Medicare Advantage program entirely within five years while the enhanced Medicare benefits are implemented. Truth is, if the overpayments were ended, the companies would exit the Medicare program voluntarily.
- Immediately end the Direct Contracting Entity scheme, and instead begin a public examination of how this program was quietly implemented without bothering to inform the public or seek meaningful legislative oversight.
The founding mission of the Medicare program should be restored: To ensure the health and financial security to our seniors in an efficient manner, rather than serving as a money machine for the current generation of Willie Suttons.
This commentary is by Dr. Marvin Malek, an internal medicine specialist working at Springfield Hospital. He is also on the executive committee of Vermont Physicians for a National Health Program.