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From the category archives: Medicare

When “Don’t Cut Medicare” Really Means “Protect Private Insurers’ Profits”

The annual lobbying extravaganza by the multi-billion dollar private insurance industry which sells Medicare Advantage plans to seniors, will enter a new phase tomorrow when the Centers for Medicare and Medicaid Services announces it’s 2016 rate schedule.  Lobbyists (America’s Health Insurance Plans alone spent nearly $5 million in just six months last year) have been in hyper-drive convincing Washington that trimming their billions of dollars in federal subsidies is the same as cutting seniors’ Medicare benefits.  It’s not.  But all that lobbying has paid off so far because not only have the proposed single-digit cuts been avoided; they’ve been replaced with rate increases:

“The Obama administration turned a proposed 1.9 percent cut to 2015 Medicare Advantage health plans into a .4 percent increase after heavy lobbying from insurers and the Hill. It was the second-straight year that the Medicare agency transformed a proposed rate cut into a raise.  Still, Medicare Advantage enrollment has grown every year since the ACA passed in 2010. In fact, enrollment has increased more than 9 percent each year since 2012, when the ACA’s cuts to the Medicare Advantage started to take effect.  The law is supposed to cut payments by $156 billion over 10 years because the program has historically reimbursed private insurers at a higher rate than the traditional Medicare program. Private plans are reimbursed at 106 percent of the traditional program, and Obamacare aims to close this gap.”  Washington Post

Except that gap will never be closed as long as the powerful insurance industry is allowed to pretend that a 1.9% cut in their federal overpayment is unreasonable to ask from  companies with financial reports like these: 

“Revenues at Humana for 2014 climbed 17.4% year over year to $48.5 billion. Meanwhile, reported premiums and services revenues increased 9.2% to $3.1 billion, primarily on the back of an increase in average group Medicare Advantage membership.” 

UnitedHealth Group’s full year 2014 revenues of $130.5 billion grew $8 billion or 7 percent year-over-year. UnitedHealthcare growth was led by strength in the public and senior sector.”

Let’s not forget that these giveaways to private insurers, covering just one-third of Medicare beneficiaries, are being paid for by taxpayers and the majority of seniors who don’t even participate in a private MA plan. The fact that these subsidies exist is terrible public policy.  The fact they continue to be protected by lawmakers is indefensible.  Especially when you consider the mounting evidence that the only advantage to Medicare Advantage plans is to the $884 billion dollar a year health insurance industry. 

Reports of Medicare Advantage fraud continue to surface.  Whistleblowers (including a former Bush administration official) have filed more than a half-dozen federal court cases detailing systemic over-billing by private Medicare Advantage insurance companies.

The Center for Public Integrity has investigated MA plans in depth.  It reports CMS officials acknowledge billions of dollars have been improperly paid to private MA plans due to a practice called “upcoding” in which insurers exaggerate how sick their patients are to increase their “risk score” and collect higher Medicare reimbursements. Some of CPI’s other findings include:

  • Risk score errors triggered nearly $70 billion in “improper” payments to Medicare Advantage plans from 2008 through 2013 — mostly overbillings, according to government estimates. 
  • Risk scores of Medicare Advantage patients rose sharply in plans in at least 1,000 counties nationwide between 2007 and 2011, boosting taxpayer costs by more than $36 billion over estimated costs for caring for patients in standard Medicare.
  • In more than 200 of these counties, the cost of some Medicare Advantage plans was at least 25 percent higher than the cost of providing standard Medicare coverage.
  • In 2012, CMS audits of six plans found that private insurers couldn’t justify payments for 40 percent or more of their patients. Those overpayments alone cost the Medicare program nearly $650 million in 2007.  That’s just for six plans for one year.
  • The Government Accountability Office reports Medicare Advantage plans collected $3 - $5 billion in “excess payments” over just two years (2010-2012) because of private insurers “upcoding.”
  • A new Government Accountability Office investigation is now underway continuing its look into MA “upcoding” fraud which, by some estimates, has provided an $70 billion dollars of improper payments to private insurance companies.

This is just the fiscal side of what the privatization of Medicare has meant.  Now let’s consider what beneficiaries in Medicare Advantage plans have faced.  Unfortunately, that news is also disheartening.

  • The Center for Medicare Advocacy reports there is evidence that private insurers are “cherry picking” healthier seniors for their plans to keep costs down (and profits high.)  “A recently released CMS report confirms advocates’ fears by concluding that disenrollment by individuals from MA plans back to traditional Medicare ‘continues to occur disproportionately among high-cost beneficiaries, raising concerns about care experiences among sicker enrollees and increased costs to Medicare.’”
  • The Kaiser Family Foundation says that “Since 2012 average out-of-pocket spending limits have been on the rise, which could expose a subset of enrollees to higher costs – mainly those who have significant medical needs.” Again, that means older and sicker seniors.
  • These rising premiums are confirmed by the industry itself in a survey distributed to lawmakers.  Incredibly, the insurance lobby uses their premium hikes as justification for Congress to protect private insurers’ massive subsidies.   

“The sickest patients who need the most care have seen their maximum annual out-of-pocket costs increase by as much as $761 since 2012, according to the study, which was conducted by the actuarial firm Milliman for the Better Medicare Alliance advocacy group. The value of extra benefits that the health plans provide fell by a national average of $180.24 from 2012 to 2015.”  Congressional Quarterly

It’s hard to imagine how our political leaders can justify preserving federal over payments to private insurers in Medicare with a track record that looks like this. However, if early media reports are correct that’s exactly what’s likely to be announced tomorrow – federal subsidies to one of the wealthiest industries in America’s will be preserved while taxpayers and seniors in Medicare will continue to foot the bill.

What ACA Repeal Means for Seniors

House Republicans have voted more than 50 times to rollback or fully repeal the Affordable Care Act.  They did it again yesterday. While it feels like Bill Murray’s movie “Groundhog Day” it’s not even close to funny for the millions of Americans this repeal would hurt.  

 

Seniors have probably been the most demagogued group when it comes to what the ACA actually means to their health care. Remember those fake “death panels” you were assured were a part of health care reform?  They weren’t.  The ACA also didn’t “destroy Medicare” as promised by opponents.  Quite to the contrary, seniors in Medicare have benefitted from a number of important improvements since its passage.  This success is exactly why the conservatives in Washington remain desperate to repeal health care reform before evidence of the ACA’s success can no longer be buried in a mountain of their false claims and political hysteria.

 

Medicare beneficiaries will save, on average, $5,000 over the next ten years thanks to health care reform provisions. Here are just a few of the real-life benefits millions of seniors in Medicare would lose immediately if Republicans have their way and repeal the Affordable Care Act.  You can see even more in our NCPSSM brief.  

 

  • No out-of-pocket costs for preventive services like colorectal and mammogram screenings and annual wellness visits 
  • 50% discount for brand name drugs purchased while in the Part D donut hole, leading to the closure of the donut hole entirely 
  • $700 in covered drug costs for the average senior would be lost and the sickest seniors would face $3,600 in additional out-of-pocket costs
  • Reduction of billions in overpayments to private insurers in Medicare and a new requirement that 85% of every dollar is spent on healthcare rather than costs/profits 
  • $200 per year in premiums and $200 in out-of-pocket costs to be saved by seniors by the year 2018 
  • $350 million in fraud-fighting investment 
  • Medicare Trust Fund will lose years of solvency

 

Of course, seniors in Medicare aren’t the only ones this repeal would hurt.  Here’s a list of what losing the Affordable Care Act means for Americans of every age.

The President’s Budget Plan -Good News and Bad News for America’s Seniors

 Reaction from National Committee to Preserve Social Security and Medicare President/CEO, Max Richtman on the President's Budget: 

“We’re glad to see President Obama respond to the GOP majority’s Social Security hostage-taking by including language in his 2016 budget allowing the routine rebalancing of the Trust Funds. Threatening people with disabilities with a 20% benefit cut unless there are broader Social Security benefit cuts plays politics with the livelihoods of 11 million Americans and their families rather than resolving this imminent funding issue. We applaud the President for taking a stand against this Social Security ploy.  The President also included increased funding for the Social Security Administration which is desperately needed by an agency that’s been forced to reduce local office hours, cut back on consumer services, and increase the wait time for disability hearings. We urge Congress to approve this Social Security Administration budget.

While the President’s budget thankfully no longer includes cuts to Social Security, through the Chained-CPI proposal, his 2016 plan unfortunately still targets seniors by shifting more costs to Medicare beneficiaries through increased means-testing, premium hikes and co-pays. While some tout increasing means testing in Medicare as a way to insure ‘rich’ seniors pay their share, the truth is, the middle-class will take this hit as well.

Medicare has been means-tested since 2007 and the number of beneficiaries subject to higher premiums has been increasing.  If passed, the President’s means testing proposal will hurt middle-class individuals and flies in the face of his budget theme of ‘middle-class’ economics.  The economic realities facing America’s middle-class retirees are ignored by these provisions which shift even more costs onto seniors and exacerbate the retirement deficit gap millions of Americans face now and into the future. These Medicare proposals are especially worrisome given the fact that with the new GOP majority in Congress, passage of these cost-shifting plans can happen with a simple majority vote in the Senate posing a serious threat to millions of American seniors.” ...Max Richtman, NCPSSM President/CEO

Will the President’s Commitment to Middle-Class Agenda Protect Social Security too?

There is always plenty of Monday morning quarterbacking after each year’s State of the Union.  However, reading the commentary on last night’s speech was especially interesting since President Obama has clearly decided to take the gloves off in pursuing a popular middle-class economic agenda the American people support but the GOP-controlled Congress has no intention of passing:

“Republicans said that they were caught off guard by a major component of the president’s 2015 agenda, which he announced over the weekend and detailed further in his speech, to raise taxes and fees on the wealthiest taxpayers and the largest financial firms to pay for, among other things, tax breaks for the middle class and free community college. While these programs may prove popular with many Americans, Republicans said that they hoped the American public would see them as a ploy from a president who knows Congress will never pass them.”  The New York Times

What the Republican leadership has supported is more tax cuts for huge corporations and the wealthy plus cuts to Social Security and Medicare. While the President didn’t emphasize Social Security and Medicare in last night’s State of the Union, he did highlight their importance to American families’ economic and health security.  Truth is, you simply can’t improve the financial outlook for average Americans without protecting these programs.  But of course, these days “protect” has very different meanings depending on whom you talk to in Washington.

Remember all those Congressional campaign promises about “protecting” Social Security?  For the newly sworn-in GOP House what that actually meant was voting just hours after taking their oaths of office to put Social Security benefits cuts at the top of the Congressional agenda.  You’ve got to give the House leadership credit for stealth.  No one, outside a small circle of Republican Rules Committee members and GOP leadership, even knew this Social Security attack was coming.  Slipped inside what’s usually a routine administrative start to each Congressional session was an unprecedented change to House rules that would allow a 20% benefit cut for millions of disabled Americans unless there are broader Social Security benefit cuts or tax increases. Of course, House Republicans have no intention of passing tax increases so guess what’s left?  Benefit cuts to millions of Americans who receive Social Security.

This House vote illustrates the increasingly Orwellian nature of our political discourse, where words have little meaning because "save” means "slash" and "protect" means "privatize.” What’s even more noxious about this particular assault on Social Security is the ongoing effort to pit beneficiaries – retirees, the disabled, survivors and their families – against each other.  Proponents of this stealth rule change in the House claim seniors will somehow suffer if the disabled are allowed access to the benefits they too have contributed to throughout their working years. That’s a particularly absurd notion since the majority of disability recipients are also older Americans.  However, the divide and conquer politics of fear all-too-often work.  This latest Social Security attack is built on a foundation of lies intended to demonize America’s disabled community.

No doubt, you’ve already heard the messaging, most recently espoused in an especially candid way by Senator and Presidential hopeful Rand Paul that: Social Security disability fraud is rampant because it’s so easy to receive benefits and people would rather collect a hefty check from the government than work.  It’s the 2015 incarnation of “our nation is full of ‘welfare queens’ and ‘greedy geezers.’” It also suffers from the same basic problem...it’s simply not true.

So let’s break down a few of these Disability Myths.

 

MYTH: “Disability has become a form of permanent welfare for a lot of folks. It's not that hard to prove a mental illness, or mental issues, or pain issues.” 

Not that hard?  So, why are the vast majority of claims denied?

 FACT: “Nearly 80 percent of applicants are denied at the initial level, and fewer than 4 in 10 are approved after all levels of appeal. Underscoring the strictness of the disability standard, thousands of applicants die each year while waiting for benefits. And one in five male and nearly one in six female beneficiaries die within five years of being approved for benefits. Disability Insurance beneficiaries have death rates three to six times higher than other people their age.” Center for American Progress

 

It’s seems pretty ridiculous to claim the system’s being widely-abused when so many die just years after receiving benefits or while they’re still waiting for an answer.

MYTH:  Growth in Social Security disability claims is “astonishing”, an “epidemic” and “startling.” 

Actually, it’s called demographics.  Ever heard of the baby boomers? Former SSA Commissioners from both Republican and Democratic administrations have taken issue with this fact-free, hysteria-laden portrayal of the disability program’s growth.

 FACT:  “It is true that DI has grown significantly in the past 30 years. The growth that we’ve seen was predicted by actuaries as early as 1994 and is mostly the result of two factors: baby boomers entering their high-disability years, and women entering the workforce in large numbers in the 1970s and 1980s so that more are now "insured" for DI based on their own prior contributions.” Open Letter from former SSA Commissioners

 

 “As Baby Boomers retire, the program’s growth has already leveled off and is projected to decline further in the coming years.”  Center for American Progress

 

MYTH:  The entire system is “broken,” rife with “fraud” and “rubber-stamping judges” bankrupting the entire Social Security program.

 

 FACT:  The Government Accountability Office found that improper payments of Social Security benefits that include Disability Insurance had an error rate of just 0.6 percent. Government Accountability Office

 

Social Security touches the lives of virtually every American family and has unparalleled support across all ages, political parties and demographics.  The GOP led House clearly hopes to drive a wedge through that coalition, pitting seniors against people with disabilities, young versus old and workers versus retirees.  So much for a new Congress that “works together.”

President Obama’s economics agenda for the middle-class is not only popular but desperately needed for millions of Americans left behind in this recovery...including Social Security beneficiaries of all ages. Of course, the GOP Congress won’t pass it but there’s always 2016. 

Will the President Fight for Social Security & Medicare?

President Obama’s State of the Union address to Congress next Tuesday should provide some desperately-needed insight into just how far this administration will go to defend and strengthen America’s two most successful income and health security programs. The new GOP Congress has made their intentions clear by attacking Social Security on Day One of the new session.  The White House; however, remains silent on the GOP’s latest move:

“TPM asked multiple times last week for the White House's position on the House action, but never received a formal response, a stark contrast to the loud public pronouncements of Brown, Warren, and others. It also invokes the uneasy relationship between the White House and Social Security advocates, who were dismayed by Obama's willingness to accept cuts to the program during the 2011 grand bargain talks with House Speaker John Boehner (R-OH).” 

{Update:  The White House did respond after our initial post . A spokesperson told TPM "Generally speaking, the Administration strongly opposes any efforts to undermine Congress’ ability to reallocate funds between the Social Security retirement and disability trust funds," a White House spokesperson told TPM, "as they have done with bipartisan support numerous times in the past in both directions."}

NCPSSM has urged the President to support reallocation, as has happened without controversy 11 previous times, to avoid a massive benefit cut Americans with disabilities simply cannot afford.

“We applaud you for making middle-class mobility and economic equality one of your top priorities.  Social Security helps to provide a lifetime of economic equality by insuring millions of Americans against the risks of retirement, disability and survivorship. 

For that reason, the National Committee urges you to support the reallocation from the OASI Trust Fund to the DI Trust Fund and oppose the House majority’s demand to cut benefits in exchange for addressing the Disability Insurance program’s financing.  Your State of the Union address would be an ideal opportunity to reaffirm your support for Social Security.”  Max Richtman, NCPSSM President/CEO

In truth, the White House could have invested an entire week just responding to all of the attacks launched by GOP Congress in its opening days (so much for working together) so it’s hard to read too much into this silence on Social Security.  However, Tuesday’s State of the Union address should change that.  President Obama must set the tone and make it clear to the House and Senate that cutting benefits to families who depend on Social Security and Medicare is simply not an option. 

While Republicans certainly didn’t campaign on cutting benefits to middle-class families, now that they’re elected, GOP leaders in the House have made it clear that’s exactly their intention.  President Obama’s State of the Union provides an important opportunity to set the record straight and push back on all of the falsehoods currently being used to justify cutting benefits to the middle class.

Here are just some of the more outrageous claims:

The new Chairman of the House Budget Committee, Rep. Tom Price (R-GA), went so far as to create his own set of Social Security numbers to justify the GOP attack by claiming Social Security:

 “is a program that right now on its current course will not be able to provide 75 or 80 percent of the benefits that individuals have paid into in a relatively short period of time …”

There’s nothing about this statement that is true.  Even if Congress does absolutely nothing to improve Social Security’s long-term solvency (and no one believes that will happen) the program would be forced to reduce benefits by about 25% two decades from now. Any benefit cut is unacceptable; however, it’s not too much to expect Congressional Committee Chairmen to stick to the facts. Another House Committee Chairman, the head of the Social Security subcommittee Rep. Sam Johnson (R-Texas), led recent House the effort to hold the Disability program hostage in order to extract cuts program-wide.  He claims:

the program is “plagued by fraud” and that “the public is fast losing faith in Social Security, and I don’t blame them, because I have too.” 

Neither are true. 

The Government Accountability Office found that improper payments of Social Security benefits that include Disability Insurance had an error rate of just 0.6 percent.  SSA’s Inspector General reports less than 1% fraud in the disability program.  Any fraud is too much but what reasonable person would consider  less than 1% of anything a “plague.”

Far from losing faith in Social Security, the American people of all ages and political parties continue to show unparalleled support for the program in spite of Congressional conservatives’ campaign to undermine it. Not only do they support Social Security in its current form, by large margins they’re willing to pay more to improve it and boost benefits. The latest National Academy of Social Insurance survey of Americans found:

Seven out of 10 participants prefer a package that would eliminate Social Security’s long-term financing gap without cutting benefits. The preferred package would:

  • Gradually, over 10 years, eliminate the cap on earnings taxed for Social Security. With this change, the 6% of workers who earn more than the cap would pay into Social Security all year, as other workers do. In return, they would get somewhat higher benefits.
  • Gradually, over 20 years, raise the Social Security tax rate that workers and employers each pay from 6.2% of earnings to 7.2%. A worker earning $50,000 a year would pay about 50 cents a week more each year, matched by the employer.
  • Increase Social Security’s cost-of-living adjustment to reflect the inflation experienced by seniors.
  • Raise Social Security’s minimum benefit so that a worker who pays into Social Security for 30 years or more can retire at 62 or later and have benefits above the federal poverty line.

With this State of the Union, President Obama has an opportunity to provide some truth-telling on Social Security and Medicare while also sending a clear message that the White House will not aide and abet conservatives who intend to cut middle-class benefits to pay for tax cuts for huge corporations and the wealthy.  

We hope the President will join the American people and be bold in the defense and expansion of Social Security and Medicare rather than leave the door open to continued hostage-taking and deal-making designed to unravel the economic security so many Americans depend on.

 

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