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From the category archives: privatization

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.

Social Security, Medicare and the GOP Congress

The Senate’s new majority leader has been true to his word...Mitch McConnell still won’t talk about his plans for Social Security and Medicare, even now that he’s been re-elected and will serve as the new leader of the Senate.

However, House Speaker John Boehner has no problem laying out the GOP plan.  There are no real surprises here, it’s basically the GOP/Ryan Budget version 4 (or 5, we’ve lost count) which has only avoided full passage because of the formerly Democrat-controlled Senate. As usual, lowering corporate tax rates while cutting Social Security and Medicare are items #1 and #2 of the GOP 5 point plan.  Lower taxes for businesses, Couponcare for seniors and raising the retirement age for Social Security are now back on the table with the Republican-led Congress.

Is anyone really surprised?

Care About Social Security & Medicare? Then VOTE

The Social Security Disconnect Between Congress and Everywhere Else

It’s that time of the year (just days before Election Day) when every Congressional candidate extolls the virtue of Social Security.  Too many of these candidates will then return to Congress (with your vote) singing a different tune lamenting that America simply “can’t afford entitlements” like Social Security and Medicare.  Only after Election Day will you discover that “save” actually means “slash” and “protect” means “privatize.” They’ll claim your benefits must be cut or programs privatized to “save” the programs for future generations.  The problem is...that’s simply not true and the American people of all political parties, ages and incomes don’t believe that cutting benefits is the best way to strengthen Social Security.

This Social Security disconnect is illustrated in a big way in a new report released today by the National Academy of Social Insurance“Americans Make Hard Choices on Social Security” shows that Americans’ support for Social Security is unparalleled and they are willing to pay more in taxes to stabilize the system’s finances and improve benefits.  We highly recommend you read the entire study (it’s important!) but here are some key highlights:

To gauge Americans’ policy preferences, the survey used trade-off analysis — a technique that is widely used in market research to learn which product features consumers want and are willing to pay for. The trade-off exercise allowed survey participants to choose among different packages of Social Security changes. As lawmakers would do, they weighed how each policy change would affect workers, retirees, and the program’s future financing gap, and then chose among different packages of reforms.

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.

Again, not only do Americans value Social Security they are willing to pay to sustain and improve it.  This package was preferred by large majorities across political parties and income levels. 68% of Republicans, 74% of Democrats, and 73% of independents favored this no-cuts plan, as do 71% of study participants with incomes above $75,000 and 68% of those with incomes under $35,000. 

We suggest that if you see a political candidate on the campaign trail between now and Election Day ask him/her about this plan and its support by the vast majority of all Americans.   Will they support fixing Social Security’s long-term solvency while also improving benefits without cutting the program?

It can be done, if only there was the political will to do it.

Good News for Seniors in Medicare That You Won’t Hear About from Conservatives

In spite of years and years of doom-and-gloom predictions from conservatives that Obamacare will hurt Medicare, the facts just continue to tell another, very different story.  Earlier in the month the annual Medicare Trustees report showed how the ACA continues to extend the program’s solvency.  Now, the Congressional Budget Office has even more to say:

“You’re looking at the biggest story involving the federal budget and a crucial one for the future of the American economy. Every year for the last six years in a row, the Congressional Budget Office has reduced its estimate for how much the federal government will need to spend on Medicare in coming years. The latest reduction came in a report from the budget office on Wednesday morning.

The changes are big. The difference between the current estimate for Medicare’s 2019 budget and the estimate for the 2019 budget four years ago is about $95 billion. That sum is greater than the government is expected to spend that year on unemployment insurance, welfare and Amtrak — combined. It’s equal to about one-fifth of the expected Pentagon budget in 2019. Widely discussed policy changes, like raising the estate tax, would generate just a tiny fraction of the budget savings relative to the recent changes in Medicare’s spending estimates.”

Unfortunately, these fiscal facts will be ignored by those in Washington determined to cut Medicare benefits. Even though he’s on a nationwide book tour, Rep. Paul Ryan is doing everything possible to ignore talking about his plan which would turn Medicare into CouponCare while also repealing the ACA -- stealing years from Medicare’s solvency, eliminating free screenings for seniors, preserving massive subsidies for private insurers in Medicare Advantage and bringing back the costly prescription drug donut hole. 

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