PNHP

Medicare Dis-Advantage: Overpayments and Inequity

Medicare Dis-Advantage: Overpayments and Inequity

The very “choice” that Medicare Advantage is said to offer is undermining Medicare’s promise of equal and universal care for seniors.

By Adam Gaffney, M.D., M.P.H., David U. Himmelstein, M.D., and Steffie Woolhandler, M.D., M.P.H.
The Nation, July 1, 2024

Medicare Advantage—the privatized Medicare plans run by insurance firms but funded by the federal government—rips off taxpayers. On this there is little controversy. In March, MedPAC, Congress’s nonpartisan advisory board on Medicare policy, estimated that this year alone taxpayers will overpay Medicare Advantage plans by $83 billion—the savings to Medicare if all of those plans’ enrollees were instead covered by the traditional, fully public Medicare program. A 2022 New York Times exposĂ©, “’The Cash Monster Was Insatiable’: How Insurers Exploited Medicare for Billions,” lays out the gory mechanisms—like fraudulent schemes (known as “upcoding”) to make patients look sicker on paper, which ups payouts from the government.

So much for the alleged efficiencies of the private sector in healthcare. Still, if these overpayments were the only problem with Medicare Advantage, giving the insurance firms a big haircut might fix the program’s defects. The problems, however, run deeper.

The core business model of Medicare Advantage relies on denying care to enrollees; lower outlays for care mean bigger profits. Implementing that strategy requires an immense, and immensely wasteful, insurance bureaucracy that consumes about 14 percent of Medicare Advantage revenues, sevenfold higher than traditional Medicare’s 2 percent overhead. Even worse, Medicare Advantage—which has grown to cover half of all Medicare beneficiaries—is undermining a cornerstone of Medicare: its promise of equitable, single-tier care for the nation’s elderly.

The New Deal did not, despite the efforts of some reformers, give us universal healthcare. President Harry Truman’s postwar push for national health insurance was defeated by a McCarthyite campaign led by the American Medical Association. Subsequently, the Truman-era supporters and architects of national health insurance plans retreated to a narrower vision: a program just for the elderly, which they hoped to expand later. After Democrats swept the 1964 midterm elections amid historic labor and civil rights mobilizations, that vision came to fruition when President Lyndon Johnson signed a bill establishing Medicare.

Medicare was, in many respects, a compromise. The price for the votes of Congressional Dixiecrats (segregationist Southern Democrats) for that federally administered program for the (disproportionately white) elderly, was an assurance that Medicare wouldn’t be expanded to the non-elderly poor, many of them Black. That assurance took the form of Medicaid, a program that offered states federal funding but largely ceded control to state governments—a bow to “states’ rights.” And for the elderly, Medicare emulated private insurers by requiring substantial out-of-pocket payments in the form of copayments, deductibles, and uncovered services, gaps in coverage mostly absent from Canadian- and European-style universal healthcare.

But for all its faults, Medicare retained a universalist, New Deal ethos, covering all older adults—rich and poor—and granting access to virtually all doctors and hospitals. Not everyone had Medicare, but virtually everyone would upon turning 65, at which point their insurance and access to care would be, at least legally, the same. It was one federal program—which allowed the federal government to wield Medicare to desegregate Southern hospitals in the years after its passage: No hospital could afford to turn it down.

But soon, private insurers began to infiltrate Medicare. Legislation signed by President Ronald Reagan opened the door for private insurers to sell Medicare “managed care” plans that could retain as profit any funds not spent on enrollees’ care. The share of seniors enrolled in those privatized Medicare plans, less than 5 percent in 1985, rose to nearly 20 percent by the end of the 1990s. President George W. Bush’s 2003 Medicare Modernization Act created the current iteration of privatized Medicare, dubbed Medicare Advantage, which really opened the floodgates to insurers. Since then, the share of seniors enrolled in the privatized Medicare Advantage plans has progressively risen, topping 50 percent for the first time last year, when UnitedHealthcare (the nation’s largest insurer) garnered nearly half of its total premium revenues from Medicare Advantage, and another quarter from Medicaid managed-care contracts.

From its inception, privatized Medicare has been rife with fraud and mismanagement. The largest privatized Medicare contractor of the Reagan era—International Medical Centers (IMC)—enrolled 197,000 seniors before collapsing in 1987—leaving $200 million in unpaid bills from doctors, hospitals and other providers. During its short run, IMC spent lavishly on administrators and lobbyists, hiring at least nine former federal officials, including the former general counsel and chief of staff of the Department of Health and Human Services, and the head of the HHS agency that oversees Medicare. (The government/insurer revolving door persists: Obama’s Medicare chief left to head the insurance industry’s trade association, and Biden’s director of the Medicare “Innovation Center” previously served as vice president of an insurance giant.) IMC’s President Miguel Recarey—who had earlier been accused of embezzling funds from a children’s hospital and boasted about his relationship with mob boss Santos Trafficante—was accused of swindling $230 million from Medicare and fled to Spain after being indicted for bribery, conspiracy, and wiretapping, amid charges that IMC provided grossly inadequate care and pressured sick (and hence unprofitable) enrollees to disenroll; he remains a fugitive. The state of Florida ultimately seized the company and sold it off to Humana, which remains a leading MA insurer today.

While insurers have, over time, refined their profit-maximizing tactics, there is considerable continuity. Plans have long engaged in so-called “favorable selection”—recruiting healthier seniors with lower health costs (“cherry-picking”) and avoiding or ejecting the sicker ones whose high medical costs threaten plans’ profits (“lemon-dropping”). Insurers have used diverse means to achieve this, like holding enrollment seminars in non–wheelchair accessible buildings, offering gym memberships as a perk (which appeals to healthier, more physically active seniors), and running glossy TV commercials, many depicting robust elders mountain biking, skiing, or even jumping on a trampoline (signaling that such plans are not intended for frail elders).

MA plans coax expensively ill members to disenroll by, for instance, putting medications they need (e.g., cancer chemotherapies) into the highest drug benefit tier, which loads out-of-pocket costs onto the sickest patients. Similarly, unlike traditional Medicare, MA plans limit enrollees to narrow networks of doctors and hospitals, thwarting enrollees’ access to specialized providers like psychiatrists and cancer hospitals. For patients with complex illnesses, these managed-care restrictions can be a major barrier to care. Consequently, sicker and disabled seniors (such as those with dementia, or needing nursing home or rehabilitation care) disproportionately depart MA for traditional Medicare—further enriching the MA pool with healthier seniors, reducing insurers’ per-patient outlays for care and increasing their profits. The upshot is a windfall for insurers: MedPAC estimates that insurers will garner overpayments of $35 billion this year thanks to “favorable selection” alone.

Such overpayments have persisted—indeed, increased—despite reforms specifically designed to rein in this misbehavior. Since 2004, government payments to MA plans insurers have been based on the average sickness levels (i.e., risk scores) of their beneficiaries, which the government calculates from diagnosis codes that the plan submits. Insurers quickly learned how to play that game. They began padding enrollees’ medical records with (often irrelevant) diagnoses to make them look sicker on paper—so-called “upcoding.” Regulators, in an effort to get ahead of insurers, slapped a discount on payments to MA plans to account for their upcoding. But insurers again outmaneuvered the regulators, coding ever more avidly, using innovative techniques like dispatching nurses to enrollees’ homes—not to treat enrollees but merely to put more diagnostic codes on paper, including some based on highly suspect in-home tests. Upcoding has allowed insurance firms to extract enormous overpayments—an estimated $50 billion in 2024 alone—on top of the aforementioned “favorable selection” bonanza.

Two of us (with Ida Hellander) previously estimated total taxpayer overpayments to Medicare Advantage plans at $282.6 billion from 1985 to 2013. Since then, overpayments have ballooned—totaling more than $400 billion over the past decade, according to MedPAC’s estimates. But even as overpayments deplete Medicare’s finances, Medicare Advantage poses another, even graver threat to the program: undermining its core commitment to equal access and equitable care.

Ironically, even as Medicare Advantage plans soak the taxpayers, their enrollees receive much less care than they would if covered by traditional Medicare. Insurers’ narrow provider networks and onerous prior authorization requirements restrict care through inconvenience and outright payment denials. And (unbeknownst to most patients) insurers often use bonuses or penalties to incentivize physicians—especially the tens of thousands that they now directly employ—to deny care. Reams of research has found that beneficiaries with Medicare Advantage (relative to those in traditional Medicare) receive less medical care, e.g., fewer home care visits from aides, speech therapists, physical therapists, or nurses. Among cancer patients requiring complex surgeries, Medicare Advantage beneficiaries are less likely to get surgery at high-volume cancer hospitals where quality is highest, and suffer longer delays in treatment and higher death rates. In effect, Medicare Advantage has introduced fresh inequities into Medicare. Increasingly, it is no longer one national program providing a single tier of access to nearly all providers: today, Medicare resembles our broader fragmented, multitiered and unjust insurance system.

Why, then, would beneficiaries enroll? Some are bamboozled by insurers’ slick and ubiquitous marketing. During Medicare’s seven-week open enrollment period in 2022, TV viewers were inundated by 643,852 English-language ads and more than 40,000 in Spanish. Plans also deploy some of their overpayments to offer some extra benefits—e.g., free eyeglasses or partial dental coverage—that are attractive to many seniors. And most importantly, insurers can reduce seniors’ monthly premiums for drug coverage—sometimes to zero—as well as their copayments for routine care like office visits.

Unsurprisingly, these perks are most attractive to beneficiaries with little cash to spare. Consequently, low-income and non-white seniors disproportionately “choose” Medicare Advantage—especially “zero-premium” plans and restrictive, HMO-style coverage. In other words, increasingly, Medicare beneficiaries are being sorted; even among Medicare Advantage plans, a socioeconomic gradient has emerged, with more restrictive plans enrolling poorer beneficiaries. And this sorting has medical consequences: One study found, for instance, that enrollees in stingier plans suffer higher death rates than those in less restrictive ones.

The harms resulting from Medicare Advantage plans’ privatization of Medicare are hence even more serious than is commonly realized. They don’t just extract tens of billions in overpayments from the federal treasury annually (though they do), or deny potentially life-saving care to the sickest enrollees (though they do that as well), and waste billions on the administrative bureaucracy needed to deny care (they do that, too). The very underlying “choice” that Medicare Advantage is said to offer undermines Medicare’s Great Society promise of equal and universal care for seniors.

Medicare Advantage enrollment continues to rise: if that trend continues, insurers will come to entirely dominate the program. But traditional Medicare’s serious shortcomings, including inadequate benefits and high cost-sharing, should not be whitewashed. Fortunately, as it turns out, the two problems have a single solution: end Medicare Advantage and use the tens of billions in savings to expand benefits for all beneficiaries.

Or better yet, pass a nonprofit Medicare for All reform that would address these problems, and amend current Medicare payment policies that have tolerated, and even encouraged, healthcare profiteering and the corporate takeover of care. Such reform could deploy the even larger savings on administrative bureaucracy (about 17 percent of health spending, equivalent to $832 billion in potential savings this year) to improve coverage for everyone. What we must not do, however, is stand by and watch insurers privatize Medicare to the point where we can no longer recognize it.

Dr. Adam Gaffney is a critical care physician, an assistant professor at Harvard Medical School, and past president of Physicians for a National Health Program. Drs. David U. Himmelstein and Steffie Woolhandler are Distinguished Professors of Public Health at the City University of New York at Hunter College, and co-founded Physicians for a National Health Program.

https://www.thenation.com…

Critiquing Project 2025: Medicaid

Project 2025 lays out a sweeping reform plan for Medicaid, couched in mysterious bureaucratic jargon. We reveal the true intent: cut health care for the poor.

Project 2025 Mandate for Leadership: The Conservative Promise, April 2024, The Heritage Foundation & partner organizations, Chapter 14: Department of Health and Human Services

Medicaid Reform Proposals (pp. 466-472)
[HJM bolding of narrative]

Reform Financing: Allow states to have a more flexible, accountable, predictable, transparent, and efficient financing mechanism to deliver medical services. This system should include a more balanced or blended match rate, block grants, aggregate caps, or per capita caps. Any financial system should be designed to encourage and incentivize innovation and the efficient delivery of health care services. Federal and state financial participation in the Medicaid program should be rational, predictable, and reasonable.

Direct Dollars to Beneficiaries More Effectively and Responsibly: End state financing loopholes. Reform payments to hospitals for uncompensated care. Replace the enhanced match rate with a fairer and more rational match rate. Restructure basic financing and put the program on a more fiscally predictable budget.

Strengthen Program Integrity: Incentivize states to decrease waste, fraud, and abuse. Improve Medicaid eligibility standards to protect those in need. Conduct oversight and reform of managed care.

Incentivize Personal Responsibility: Ensure that Medicaid recipients have a stake in their personal health care and a say in decisions related to the Medicaid program. Implement work requirements and match Medicaid benefits to beneficiary needs.

Allow Private Health Insurance: Enable states to contribute to a private insurance benefit for all family members in a flexible account that rewards healthy behaviors.

Increase Flexible Benefit Redesign Without Waivers: Eliminate obsolete mandatory and optional benefit requirements for able-bodied recipients. Redesign eligibility, financing, and service delivery of long-term care.

Eliminate Current Waiver and State Plan Processes: Allow providers to make payment reforms without cumbersome waivers or state plan amendment processes. Shift the balance of responsibility for Medicaid program management to states.

Prohibit Planned Parenthood from Receiving Medicaid Funds: End taxpayer funding of Planned Parenthood and all other abortion providers. Redirect funding to health centers that provide comprehensive health care for women.

Withdraw Medicaid funds for states that require abortion insurance: Cut 10 percent of Medicaid funds

Comment:

By Jim Kahn, M.D., M.P.H.

In my previous post, I introduced Project 2025 and the threats that it presents overall. Today is the first focused post – detailing the attack on Medicaid, our primary health insurance for the poor.*

As for understanding Project 2025’s Medicaid policy agenda, let me cut to the chase. The proposed changes, despite being couched in bureaucratic buzzwords, have a straightforward and nefarious intent: Reduce health insurance coverage for the poor, by restricting both eligibility and benefits. And, equally worrisome, use Medicaid to suppress access to abortion.

Here’s the translation of Project 2025 policy jargon:

A “balanced or blended match rate” means less federal money (currently the majority of Medicaid funding), imposing a larger financial toll on states and thus lowering overall funding. “Block grants” and “caps” means fixed funding, regardless of the size of eligible populations and their medical needs, and slow or no growth over time. “End state financing loopholes”, “reform payments”, and (again) “replace enhanced match rate” all mean: lower federal contributions. All this compromises providing care, see analyses here, here, and here.

“Improve Medicaid eligibility standards to protect those in need” means: cover only the very poorest and sickest, leaving out many who currently qualify and who, in today’s fragile health insurance environment, desperately need Medicaid.

“Incentivize personal responsibility” means – impose often onerous preconditions on getting Medicaid benefits. The example, “implement work requirements” — which don’t work.

“Allow private insurance” means abandoning the Medicaid public structure in favor of private insurance, which results in widespread under-insurance – especially dangerous for the poor.

“Eliminate 
 benefit requirements” means, well, removing requirements for specific medical services, thereby increasing risk. “Redesign 
 long-term care” means – undercut the mainstay of long-term care funding for the poor and middle class.

Layered onto this broad reduction in medical benefits is a full-bore attack on abortion services. I don’t think I need to translate the language excerpted above, which is atypically clear and direct. More on this topic in an upcoming post.

What’s amazing about Project 2025 is the ability to rhetorically cast dangerous policies as being about efficiency, generosity to the sickest, and personal virtue. In contrast, we know that true efficiency and generosity are available in true universal health insurance – single payer. The security of excellent health care access will go a long way toward increasing societal virtue.

* As I’ve written previously, I very much look forward to the day when the phrase “health insurance for the poor” no longer has meaning. Meantime 
 we must maintain the program that provides for the medical needs of the economically vulnerable.

https://healthjusticemonitor.org…

Stay informed! Subscribe to the McCanne Health Justice Monitor to receive regular policy updates via email, and be sure to follow them on Twitter @HealthJustMon.

Critiquing Project 2025

Project 2025 proposes a deeply worrisome policy transformation. We will scrutinize these policies in coming weeks.

Project 2025’s “Mandate for Leadership: The Conservative Promise,” released in April, threatens to replace modern American values with a retrograde vision. This 900-page action plan proposes a rapid, broad, and enduring transformation. It lays out sweeping policy shifts that favor the wealthy and undermine support for the poor, middle class, and minorities. Its detailed specification of practical implementation steps is chilling.

The Project 2025 policy scope is wide. On the economic side, it would make permanent the 2017 tax cuts for rich individuals and corporations, promote anti-union “right to work” laws, and reduce the power of public sector unions. In health, it would undermine the effectiveness of both public and private insurance, which we’ll explore thoroughly in subsequent posts. It would compromise pandemic response and end protections for abortion and reproductive health, as well as for LGBTQ rights.

Project 2025 would also fundamentally change how government and voting work, gutting the checks and balances built into our system. Specifically, it attacks the mechanisms that assure balance and continuity in how elected officials are chosen and how they must govern. In the area of voting, it promotes requirements for photo IDs and tighter absentee voting rules, both of which disadvantage minorities, the poor, and students. This would further weaken the voting power of these groups.

Its most insidiously consequential change concerns how the government operates. Project 2025 proposes use of a bureaucratic maneuver – “Schedule F” – to reclassify tens of thousands federal senior civil service employees (with job protections) into political appointees (who serve at the pleasure of the President). This means that the most technically skilled senior managers, who know the law and how to follow it, would be replaced with inexperienced and politically pliant newcomers who would be guided by presidential whims regardless of existing law. This undermines nearly a century of accumulated law, regulations, and professional governance.

HJM sees Project 2025 as a fundamental threat to progressive health policy. Thus, we’ll be writing about it regularly in coming weeks. Our focus will be on health policy – insurance, reproductive health, equity. But we’ll also veer into other topics.

Please let me (Jim) know if you have specific questions for us to address.

https://healthjusticemonitor.org…

Stay informed! Subscribe to the McCanne Health Justice Monitor to receive regular policy updates via email, and be sure to follow them on Twitter @HealthJustMon.

Urgent Care Price Gaming

A simple xray at a basic urgent care clinic is inexpensive, right? Not when owners exploit payment rules to charge sky-high hospital prices for a service delivered in the mall. Gaming the system is the name of the game for our current profit-obsessed health care system. Time to switch to single payer!

Even Doctors Like Me Are Falling Into This Medical Bill Trap, The New York Times, Op-Ed, June 17, 2024, by Danielle Ofri

Last July, my daughter was still limping a week after a bike injury and we needed a quick X-ray to rule out a fracture. As a doctor, I knew we didn’t need an expensive emergency room for something this straightforward. We found an urgent care at the end of a strip mall in Chicago, and 20 minutes later we received the good news that there was only a sprain.

But this is health care in America. Two weeks later a bill arrived: The radiology charge from NorthShore University HealthSystem for the ankle and wrist X-rays was $1,168, a price that seemed way out of range for something that usually costs around $100 for each X-ray. When I examined the bill more closely, I saw that the radiology portion came not from the urgent care center but from a hospital, so we were billed for hospital-based X-rays. When I inquired about the bill, I was told that the center was hospital-affiliated and as such, is allowed to charge hospital prices.

It turns out that I’d stumbled into a lucrative corner of the health care market called hospital outpatient departments, or HOPDs. They do some of the same outpatient care — colonoscopies, X-rays, medication injections — just as doctors’ offices and clinics do. But because they are considered part of a hospital, they get to charge hospital-level prices for these outpatient procedures, even though the patients aren’t as sick as inpatients. Since these facilities don’t necessarily look like hospitals, patients can be easily deceived and end up with hefty financial surprises. I’m a doctor who works in a hospital every day, and I was fooled.

Following is just a comparatively brief sampling of excerpts from a couple thousand NYT readers’ comments:

“You don’t have a health care system in the US. You have a health care industry. Your industry is designed to serve a wide range of 3rd party sharks who add huge costs to medical care without actually adding any value to the process. Now, many of your medical clinics and hospitals have been purchased by private equity which ensures that your health care will diminish and your costs will rise.”

“Now everyone from doctors to patients are asking for single payer.”

“The runaway costs of medical care will only be contained when we have Medicare for All.”

“I live in Canada. I demand my right to pay taxes. Taxes help pay for our medical system. The procedures are covered, and I won’t get billed for them.”

“Taiwan has one of the best universal healthcare systems on the planet.  For profit healthcare is an affront to basic human rights.”

“Single payer Medicare for all yesterday, today and tomorrow!”

“Get the profit out of our medical system. Eliminate the middlemen and the bloat.  One national system.  Period.”

“I’m a physician, and it’s time for universal healthcare for this country!”

“The bottom line is that it doesn’t have to be this way: different examples of single payer systems are throughout the world to glean from.”

“How desperately we need a single payer system.”

“I lived in a major Canadian city for almost a decade, and even with a substantially higher tax rate, my paychecks went a lot farther. Taxes pay for good stuff, America, if you let them.”

“We really need universal healthcare so doctors can do what they need to do, in the appropriate facility where they need to do it, without insurance companies second guessing everything.”

“In the long term, America needs a public healthcare system, one in which citizens’ health and patient care, not financial returns, are the goals.”

“Solution for patients and caregivers alike: Improved Medicare for all, AKA single payer financing of healthcare.”

“It is way beyond time that the United States adopted a single-payer health care system.”

“Just another reason we urgently need a real National Health Service that covers all medical procedures.”

“A majority of Americans have for decades favored a national healthcare system. Everybody gets over their socialism phobia as soon as they are eligible for Medicare.”

“We will get the needed change when the voters put the right people into office–the right people who put the health of the community first.”

“The only answer is nationalized health care.”

“I turned 65 and got Medicare. What a revelation – I can finally afford medical care. Everyone in this country should have this. I don’t like taxes but for universal health care I would pay more taxes.”

“I’d love to have single-payer health care. This is one of those things, like roads or managing air space, that the government does better than a for-profit corporation can do.”

“Why can’t we as citizens of the richest nation in the world agree that ALL of us deserve to have a decent roof over our heads, healthy food on the table and universal healthcare?”

“The time for a single payer system is long overdue.”

“The only conceivable solution is evolution to a single payer, single insurer system, well regulated by the government.”

“We need Medicare for all, and I do not mean profit-driven insurance company owned misleadingly-advertised Medicare Advantage.”

“Medicare for all. Get capitalism out of health care.”

“How many of you complainers have contacted your Congressional representatives to voice your opinion? One can easily find online their Washington phone numbers and emails, as well as their local offices. Medicare for all!”

“Here in Canada, never a bill from Emergency or Clinic.”

“Healthcare costs are out of control. We need national health care.”

“How to fix it?  Medicare for all.”

“Single payer health care system.”

“Single payer government funded healthcare would prevent the financial rip off that Dr Ofri describes.”

“America needs a single payer system which removes profit motivations and the costly parasites that enrich themselves at patients’ and society’s expense.It’s done well elsewhere, why can we not find the will to do it for ourselves?”

“National health is the solution.”

“Another excellent argument for universal government health care.”

“It’s time to give the current approach an unceremonious burial and replace it with a truly universal single payer system.  The American model of health care is a demonstrable failure.”

Comment:

By Don McCanne, M.D.

Within just a few hours, this New York Times article on inflated medical bills precipitated a couple thousand reader responses which overwhelmed the editors of the Comments section so they closed it off to further responses. The readers’ message was loud and clear. Not only do they understand why our health care financing system is so overpriced while underperforming, as the sampling of excerpts above demonstrates they also know what to do about it: enact and implement single payer Medicare for All.

In just a few months, the rest of us will have an opportunity to express the same sentiment when we exercise our right to vote in the upcoming election. It’s crucial to understand where the candidates stand on health care justice, including the potential for a single-payer financing system, as well as other policies to make the United States a better nation for all of us. Show your support for health justice!

https://healthjusticemonitor.org…

Stay informed! Subscribe to the McCanne Health Justice Monitor to receive regular policy updates via email, and be sure to follow them on Twitter @HealthJustMon.

Medicare’s disadvantage

By Kenneth Dolkart, M.D.
Valley News (West Lebanon, N.H.), Letters, June 17, 2024

Lake Sunapee VNA & Hospice CEO Jim Culhane shared how unacceptably low reimbursement by United Healthcare threatens essential services by community visiting nurses (“For-profit companies use Medicare as a lever”; June 11). He notes how seniors face harmful denial of services, limited inpatient rehab and restrictions to narrow medical networks and unexpected discontinuation of coverage for medications. These measures maximize profit, but harm patients.

There is a “bait, then can’t switch” feature: the initial guarantee to purchase affordable Medigap insurance disappears after a year’s enrollment with Medicare Advantage. Supplementary policies are thereafter denied or unaffordable for those who try to switch. Since 20% of traditional Medicare costs are covered by Medigap, many are financially trapped in a plan they don’t want. So much for the “consumer choice” touted by ads. Four states do preserve “guaranteed issue” but this can raise premiums, since higher costs of ill seniors are passed back from Medicare Advantage to traditional Medicare and Medigap plans. Of course, since the plans are all owned by the same corporations, that’s a win-win for Wall Street!

Medicare Advantage proposed to expand benefits and use managed care “efficiencies” to save Medicare money. In reality, Medicare pays privatized plans 22% more per beneficiary than traditional Medicare expended for identical services, despite their enrollees being healthier. Such “efficiencies” cost $104 billion to taxpayers. These excessive capitations to for-profit intermediaries offers a tax-funded Medicare Advantage gravy train. $100 billion is better spent improving long-term and home care, dental or vision benefits under traditional Medicare, with lower administrative costs and burden for hospitals and clinicians.

https://www.vnews.com…

Time, Supply, and Single Payer

Expanding the supply of health care to increase competition will not control costs or cure our health system woes. Health care is unlike other economic markets. The solution is need-based expansion and efficient use of capacity to meet medical needs. Single payer and public ownership offer the tools.

Supply-Side Healthcare?, Phenomenal World, May 9, 2025, by Adam Gaffney

The politics of hospital care and construction

As some pundits tell it 
 “supply-side” competition-based expansion is exactly the medicine our healthcare system needs. The root cause of constrained access and rising healthcare costs, the argument goes, is public regulation giving the provider side of the market more leverage, allowing it to extract higher payments from insurers. Greater competition will lead to expanding supply, leveling the playing field between providers and insurers without altering the nature of ownership or public responsibility in the sector. “Call it supply-side economics, but for healthcare,” Matthew Yglesias wrote in Bloomberg, advising that we “focus less on the way insurance works than on expanding care to increase competition and reduce prices.” The Nikansen Center echoes the sentiment and generalizes it across those service industries at the core of American life. In healthcare, higher education and housing, this bipartisan consensus argues, supply expansion is the solution to rising costs.

Hospital supply expansion surely is needed in many places in the United States; decades of disadvantage, discrimination, and disinvestment have left many communities—particularly those with low-income and minority populations—deprived of needed healthcare facilities and resources. The problem is that the new “supply-side” gambit won’t succeed in securing access to healthcare for these populations. Nothing in the existing marketplace ensures that new construction will go where it’s needed. All evidence suggests that it will, rather, be put in the service of gaining market share in already lucrative areas. 


“Supply-side economics, but for healthcare” misdiagnoses the basic problem, which is not the performance of competition but rather the nature of financing and ownership. US hospitals are increasingly dominated by corporate behemoths and private equity firms who usher in skyrocketing prices and inequities while degrading the quality of care. Any effort to expand supply within the existing US healthcare scene will only accelerate this galloping corporate takeover, making us worse off in the process. Moreover, the nature of healthcare—a service with unique characteristics distinct from other commodities—poses profound consequences for the supply-side strategy of harnessing entrepreneurial spirits to expand provision efficiently. Unlike other services, the supply of healthcare induces its own demand, for every human body ultimately fails. Hospital beds, doctors’ hours, and machines can generally be put to some use. 


Multiple recent econometric analyses have found that when a shift of demand affects the use of care by one population—for instance, due to gain (or loss) of insurance coverage—the change in utilization of care by that population tends to be offset by slightly less (or more) care provided to populations whose coverage does not change. 
 My research with colleagues has come to similar conclusions. We analyzed health survey microdata before and after implementation of Medicare in 1966 and the Affordable Care Act in 2014, finding little evidence for an aggregate increase in society-wide healthcare use despite a substantial expansion of insurance (i.e. of demand), with some redistribution in use towards newly insured populations. Reviewing published utilization effects of some thirteen universal coverage expansions in capitalist nations over the past century, we found generally similar trends. …

Comment:

By Adam Gaffney, M.D., M.P.H.

As single-payer advocates, much of our focus is on healthcare access, particularly cost barriers stemming from uninsurance and underinsurance. That stands to reason: most of us fight for a better healthcare system primarily because we want to see everyone get the high-quality medical care they need when they need it. We care, more than anything, about health. Single-payer would mean that our demand for care (in economist-speak) would depend not on our insurance or wealth, but rather on our medical needs — it would, that is to say, expand and equalize “demand” by removing cost barriers that suppress use of care for the less fortunate.

But how we think about healthcare supply is important as well. Some conservative and even liberal thinkers argue that rather than focus on expanding coverage (i.e. demand), we should expand supply: i.e. more clinicians, more hospitals, and so forth, and thereby drive down the cost of care by fostering market competition. This article (by me) begins as an exploration of these “supply-wide” proposals, and argues that they wouldn’t accomplish what proponents think they would — indeed, they would cause costs to rise. It ends by making a broader argument about how the essence of medical care is time spent by human beings — time that can be redistributed but not expanded.

Supply expansion would fail as a cost control measure — even if it is needed for some services, like primary care, or for disadvantaged communities that have been left behind in our system — for a variety of reasons, as I trace, including the inefficiencies and redundancies that competition generates. Additionally, in medicine, supply often creates its own demand: ICU beds tend to be used when available, and our clinic schedules can invariably be filled.

That being said, some also envision a world where a supply-side transformation — e.g. from technological advances like AI – reduces the labor inputs needed to provide care (and other services). But in healthcare, I argue, there is zero historical or theoretical reason to believe that this will happen. Indeed, over the last century, as healthcare has been more capital intensive it has also in a sense become more labor intensive. There are more dollars of physical hospital capital assets per hospital bed than ever before, even as the number of nursing FTEs per hospital bed day has risen with the rising technological complexity of care, to give one example. On a more fundamental level, even with new tools and technologies, the time we need as healthcare providers to interview patients, evaluate reems of data, respond to concerns and questions, advocate for services, and formulate treatment plans will not fall — if anything, it will only rise. There will be no magical technological productivity fix to our healthcare woes.

We do need supply-side changes, to be clear, just not the ones that neoliberals envision. As healthcare delivery is gobbled up by corporations, cost and waste will rise even as quality deteriorates; we should think about public and community healthcare ownership along with public financing. Moreover, the simplicities of single-payer financing allow for major reductions in administrative costs, shaving off hundreds of billions of unproductive healthcare spending annually, as advocates frequently note.

At the same time, though, we should recognize that the value of some things we need, and healthcare is a prime example, is very much tied to the time that a human being puts into them. Versions of these services that contain less time – shorter visit lengths or higher patient to nurse ratios in the hospital – often have less fundamental value. Less time is being devoted to our care and health. Such time cannot be manufactured like commodities, it can only be more fairly distributed in society.

https://healthjusticemonitor.org…

Stay informed! Subscribe to the McCanne Health Justice Monitor to receive regular policy updates via email, and be sure to follow them on Twitter @HealthJustMon.

Medicare for All Explained Podcast: Episode 112

The Harm Caused by Medicare Advantage

June 15, 2024

Podcast host Joe Sparks highlights PNHP’s latest report, “Taking Advantage: How Corporate Health Insurers Harm America’s Seniors.”

He cites the many ways that so-called “Medicare Advantage” plans harm seniors—from narrow networks, to high costs, to an increased likelihood of death for certain cancer patients—and reminds us that improved Medicare for All would dramatically improve matters.

Additional episodes will be uploaded monthly. Subscribe in iTunes, or access a complete archive of the podcast, below.

https://medicareforallexplained.podbean.com

Medical Debt, U.S. Pandemic

Medical debt is widespread in the US. This video reviews causes and consequences. And considers solutions. Single payer would end medical debt.

The State of Medical Debt in the U.S., (2-hour video with ten experts), Lown Institute, May 20, 2024, Website article by Noelle Serino

Medical debt has reached epidemic levels in the United States, impacting millions of Americans and creating barriers to good health. “This is a mammoth problem that is seriously impairing the mental health, the physical health, and the productivity of our country”, said Dr. Vikas Saini, President of the Lown Institute.

“We need to enact some sort of universal, publicly-funded national single-payer plan that is administered at the state and local levels with comprehensive, lifetime benefits, dental, vision, mental health care, and so forth” said Berneta Haynes, Senior Attorney, National Consumer Law Center.

The link provides access to a two-hour video of a panel of experts covering the topics of 1) scope of the problem, 2) drivers of medical debt, 3) insights from new research, and 4) opportunities and challenges for change.

Comment:

By Don McCanne, M.D.

Our nation continues to demonstrate how our reliance on private health insurance has been a mistake, especially when considering the financial burden that it places on lower-income individuals. For national statistics on medical debt prevalence and consequences, see here and other HJM posts.

What is difficult to understand is that we know that adoption of a national single payer program would not only prevent such financial hardships, but it would also ensure affordable access to a high-performance health care delivery system for absolutely everyone.

What on earth is preventing us from moving forward with the enactment and implementation of such a program? We certainly have the supporting data, but where is our will?

https://healthjusticemonitor.org…

Stay informed! Subscribe to the McCanne Health Justice Monitor to receive regular policy updates via email, and be sure to follow them on Twitter @HealthJustMon.

Stop for-profit insurers from taking over our health care

By Aija Nemer-Aanerud and Rose Roach
Minnesota Reformer, June 12, 2024

No one’s health should be held hostage by private companies that reward investors with the money we pay for care. Yet that’s exactly what UnitedHealth Group and other for-profit insurers do every day, all across the country. And they will keep doing it until we stop them.

Private insurers deny and delay care to hundreds of millions of policyholders every year. Why? To boost profits. They force people like you and me to wait or die while their executives and shareholders get rich. They’d rather pay penalties than pay for care when doctors say we need it.

That’s why we celebrate Minnesota Democratic-Farmer-Labor lawmakers’ recent vote to ban for-profit insurers from offering HMO policies through Medicaid and the State Employee Group Insurance Program. This bold move sets an example for the nation and partially restores Minnesota’s longstanding ban on for-profit HMOs.

As long as we allow private insurers to find new ways to extract profits from health care, they will. Minnesota should lead the nation, and fully ban for-profit insurers from the state.

Minnesotans have long agreed that for-profit insurers should never be allowed to decide whether we live or die. That’s why, for 40 years, we banned for-profit HMOs from offering policies here. Then in 2017, the Republican-controlled Legislature allowed for-profit health insurance corporations to offer HMO services under the guise that doing so would benefit patients, even though they would have to charge more or deliver less services to meet their legal obligation to maximize profit for their shareholders. Private, for-profit companies like UnitedHealth, Humana and Aetna have been chomping at the bit to expand their involvement in Minnesota’s public programs like they’ve already done with Medicare Advantage.

From Minnesota-based UnitedHealth to Connecticut-based Aetna and other large insurers across the country, Medicare Advantage and Medicaid managed care programs have proven to be huge profit centers for health insurers, which is why they want to expand into Minnesota’s public health programs as well.

The U.S. Department of Labor sued a UnitedHealth subsidiary last July for wrongfully denying thousands of claims, and they were sued again in November for using faulty artificial intelligence to deny coverage for Medicare patients. They use data analytics to cut reimbursements to the bone, which helps UnitedHealth keep an extra $1 billion in fees every year, according to reporting in the New York Times. Then they sue policyholders — Allina even created a subsidiary to go after its own members.

Who gets hurt when private insurers deny claims? We all do. Doctors, nurses and people who need care are all increasingly fed up. That’s why we recently risked arrest in a peaceful protest at UnitedHealth’s headquarters to demand they stop these denials of care, along with People’s Action members who came from all across the country and allies from the Minnesota Nurses Association, the AFL-CIO Retirees, Physicians for a National Health Plan, Healthcare for All Minnesota, Be A Hero and the Labor Campaign for Single Payer. We then confronted UnitedHealth’s CEO — Sir Andrew Witty — on Capitol Hill, where he was called to testify to Congress about a data breach at a UnitedHealth subsidiary, Change Healthcare, which violated the personal data of as many as 152 million people.

This outage disrupted care for patients at 74% of hospitals nationwide, as many providers were forced to stop processing or switch to paper claims, which can take six months to approve. For Witty and UnitedHealth, this disruption was just another day at the office — one more opportunity to collect premiums while they delay and deny care.

Minnesota Attorney General Keith Ellison was right to oppose UnitedHealth’s takeover of Change Healthcare in 2022, recognizing the risks to our health if we allow private insurers to become “too big to fail.” Private insurers like UnitedHealth, which took in $22.3 billion in profit last year alone, are already too big, and they fail to provide care when we need it most.

While the new ban blocks Minnesota’s Department of Human Services from awarding contracts to for-profit HMOs and prevents these companies from offering new policies to state employees, HMOs run by UnitedHealth, Humana and Allina Health Aetna are still able to offer plans to groups and individuals, including through Medicare Advantage.

Minnesotans have an opportunity to lead the nation by telling for-profit insurers that their greed stops here. Our lives are at stake. That’s why we must prevent private insurers from taking a bigger bite of our health care, before it’s too late.

https://minnesotareformer.com…

Valley deserves and can afford ‘Medicare for All’

By George Bohmfalk, M.D.
Aspen (Colo.) Daily News, June 11, 2024

Editor:

Re: (“Grueter: Is valley health care on life support?” June 9, Aspen Daily News).

You can run but you can’t hide. Yes, health care in our beautiful Roaring Fork Valley is on life support, as it is across the entire country. People in all socioeconomic class levels are falling through the cracks by the millions every day, going without needed care and going bankrupt for care they can’t avoid.

Several well-intended local agencies like Valley Health Alliance, West Mountain Regional Health Alliance and Mountain Family Health Centers do their best to arrange care for folks, but to do anything really effective is going to require a national fix like “Medicare for All.” We can afford it; almost everyone will pay less than they do currently; care will still be delivered privately and all of us will have the peace of mind that our healthcare needs will be taken care of.

There’s not a single, valid reason not to have Medicare for All. We all deserve it. Demand it of all of your elected representatives.

https://www.aspendailynews.com…

A $600 Billion Swindle: Study Makes Case to ‘Abolish’ Medicare Advantage

"The time has come to declare MA a failed experiment," write the authors of a new paper.

By Jake Johnson
Common Dreams, June 10, 2024

A new academic analysis published Monday in JAMA Internal Medicine details the enormous sums that privatized Medicare Advantage plans have cost U.S. taxpayers in recent years and calls for the abolition of the program, which has been massively profitable for the insurance giants that dominate it.

Citing the nonpartisan Medicare Payment Advisory Commission, the paper notes that Medicare Advantage (MA) plans have overcharged the federal government to the tune of $612 billion since 2007—and $82 billion last year alone.

MA plans—now used by more than half of the eligible Medicare population—utilize a range of tactics to reap larger payments from the federal government, which provides insurers a lump sum for each Medicare Advantage patient. The size of the payment depends on the enrollee’s health, which MA plans are notorious for portraying as worse than it is in order to receive heftier government payments.

“Paradoxically, despite those overpayments, MA plans spend 9% less on medical services than [fee-for-service] Medicare spends for comparable enrollees,” reads the new study. “If MA plans pay for less care, where do the overpayments go? Some pay for supplementary benefits, although plans do not disclose how much they spend on them, and MA enrollees do not get significantly more dental care or incur lower out-of-pocket dental costs than those in FFS Medicare. Instead, overhead and profit eats up the lion’s share.”

The study’s authors estimate that MA plans’ overhead from 2007 to 2024 was $592 billion, which is “equivalent to 97% of taxpayers’ $612 billion overpayments to them during that period.”

Dr. Adam Gaffney, an assistant professor of medicine at Harvard Medical School and the lead author of the new study, said in a statement that “Medicare Advantage is a bad deal for taxpayers.”

“Money that could be used to eliminate all copayments or shore up Medicare’s Trust Fund is instead lining insurers’ pockets,” said Gaffney. “And the private insurers keep Medicare Advantage enrollees from getting needed care by erecting bureaucratic hurdles like prior authorizations and payment denials.”

Gaffney and study co-authors Drs. Stephanie Woolhandler and David Himmelstein—co-founders of Physicians for a National Health Program (PHNP)—argue based on their examination of Medicare Advantage’s decadeslong history that “the time has come to declare MA a failed experiment and abolish it.”

“Medicare Advantage plans have, in effect, stolen hundreds of billions from taxpayers,” says David Himmelstein, a lecturer at Harvard Medical School and a research associate at the consumer advocacy group Public Citizen. “And the private plans’ schemes also raise seniors’ Part B Medicare premiums. Even seniors who don’t choose to enroll in Medicare Advantage are subsidizing the private plans’ profits.”

The study’s authors observe that the elimination of Medicare Advantage would allow the federal government to use the roughly $88 billion in estimated MA overpayments for the coming year to instead “upgrade benefits for all Medicare beneficiaries.” Traditional Medicare typically does not cover dental, vision, or hearing services, which often leads people to choose MA plans.

“A smarter, thriftier way to expand benefits and lower out-of-pocket costs is possible for all Medicare beneficiaries, but first, we must eliminate MA and double down on traditional Medicare, covering all enrollees in an expanded and improved Medicare program,” the analysis concludes. “That would be a good deal for patients and taxpayers.”

Wendell Potter, a former insurance executive who has become a trenchant critic of Medicare Advantage, told Common Dreams that he agrees with the study’s authors that MA “should be eliminated.”

“Not only has it never saved taxpayers a dime since it was created during the George W. Bush administration, but it has cost us $592 billion over the last 17 years because of the high administrative costs inherent in the program and the way insurers have rigged the system to get paid excessively every year,” said Potter, president of the Center for Health and Democracy.

“The program is so entrenched, and the companies have so much political influence over Democrats as well as Republicans through campaign contributions and lobbying, that eliminating the program will be a heavy lift, at least in the near term,” Potter added. “That means that proposals to reform MA that address overpayments and abuses like prior authorization are essential and important for reform advocates to support.”

https://www.commondreams.org…

A $600 Billion Swindle: Study Makes Case to ‘Abolish’ Medicare Advantage

"The time has come to declare MA a failed experiment," write the authors of a new paper.

By Jake Johnson
Common Dreams, June 10, 2024

A new academic analysis published Monday in JAMA Internal Medicine details the enormous sums that privatized Medicare Advantage plans have cost U.S. taxpayers in recent years and calls for the abolition of the program, which has been massively profitable for the insurance giants that dominate it.

Citing the nonpartisan Medicare Payment Advisory Commission, the paper notes that Medicare Advantage (MA) plans have overcharged the federal government to the tune of $612 billion since 2007—and $82 billion last year alone.

MA plans—now used by more than half of the eligible Medicare population—utilize a range of tactics to reap larger payments from the federal government, which provides insurers a lump sum for each Medicare Advantage patient. The size of the payment depends on the enrollee’s health, which MA plans are notorious for portraying as worse than it is in order to receive heftier government payments.

“Paradoxically, despite those overpayments, MA plans spend 9% less on medical services than [fee-for-service] Medicare spends for comparable enrollees,” reads the new study. “If MA plans pay for less care, where do the overpayments go? Some pay for supplementary benefits, although plans do not disclose how much they spend on them, and MA enrollees do not get significantly more dental care or incur lower out-of-pocket dental costs than those in FFS Medicare. Instead, overhead and profit eats up the lion’s share.”

The study’s authors estimate that MA plans’ overhead from 2007 to 2024 was $592 billion, which is “equivalent to 97% of taxpayers’ $612 billion overpayments to them during that period.”

Dr. Adam Gaffney, an assistant professor of medicine at Harvard Medical School and the lead author of the new study, said in a statement that “Medicare Advantage is a bad deal for taxpayers.”

“Money that could be used to eliminate all copayments or shore up Medicare’s Trust Fund is instead lining insurers’ pockets,” said Gaffney. “And the private insurers keep Medicare Advantage enrollees from getting needed care by erecting bureaucratic hurdles like prior authorizations and payment denials.”

Gaffney and study co-authors Drs. Stephanie Woolhandler and David Himmelstein—co-founders of Physicians for a National Health Program (PHNP)—argue based on their examination of Medicare Advantage’s decadeslong history that “the time has come to declare MA a failed experiment and abolish it.”

“Medicare Advantage plans have, in effect, stolen hundreds of billions from taxpayers,” says David Himmelstein, a lecturer at Harvard Medical School and a research associate at the consumer advocacy group Public Citizen. “And the private plans’ schemes also raise seniors’ Part B Medicare premiums. Even seniors who don’t choose to enroll in Medicare Advantage are subsidizing the private plans’ profits.”

The study’s authors observe that the elimination of Medicare Advantage would allow the federal government to use the roughly $88 billion in estimated MA overpayments for the coming year to instead “upgrade benefits for all Medicare beneficiaries.” Traditional Medicare typically does not cover dental, vision, or hearing services, which often leads people to choose MA plans.

“A smarter, thriftier way to expand benefits and lower out-of-pocket costs is possible for all Medicare beneficiaries, but first, we must eliminate MA and double down on traditional Medicare, covering all enrollees in an expanded and improved Medicare program,” the analysis concludes. “That would be a good deal for patients and taxpayers.”

Wendell Potter, a former insurance executive who has become a trenchant critic of Medicare Advantage, told Common Dreams that he agrees with the study’s authors that MA “should be eliminated.”

“Not only has it never saved taxpayers a dime since it was created during the George W. Bush administration, but it has cost us $592 billion over the last 17 years because of the high administrative costs inherent in the program and the way insurers have rigged the system to get paid excessively every year,” said Potter, president of the Center for Health and Democracy.

“The program is so entrenched, and the companies have so much political influence over Democrats as well as Republicans through campaign contributions and lobbying, that eliminating the program will be a heavy lift, at least in the near term,” Potter added. “That means that proposals to reform MA that address overpayments and abuses like prior authorization are essential and important for reform advocates to support.”

https://commondreams.org…