Sometimes we hate it when we’re right.  Earlier this month we reported on the Obama administration’s policy reversal which not only blocked proposed cuts to massive private insurers in Medicare but actually give them a rate increase.  As predicted, as soon as Washington gave the nation’s highly profitable private insurance industry their cookie --they asked for the milk.

Kaiser Health News explains how United Health’s CEO claims the company’s $2.1 billion profits last quarter just aren’t enough.  They want taxpayers to pony up even more to subsidize their participation in Medicare.

KAISER HEALTH NEWS

Despite Win, UnitedHealth Criticizes Medicare Rates, Eyes Pruning Business

If the Obama administration expected the biggest health insurance company to give thanks for this month’s decision to reverse cuts to private Medicare plans, it was wrong. UnitedHealth Group CEO Stephen Hemsley said Thursday that Medicare Advantage rates are still far too low and that the company may shrink its business of managing care for seniors.

“We did not expect the fastest growing, most popular and most effective Medicare benefit option serving America’s seniors to be underfunded to this extent in 2014,” Hemsley said on a conference call with investment analysts. UnitedHealth’s Medicare Advantage business, he added, “will likely experience market exits as well as in market membership contraction as we reshape Medicare networks and benefits to respond to the continuing underfunding of this program.”

The administration’s decision to reverse cuts for Medicare Advantage, in which private insurers operate managed care networks for seniors, was seen as a significant industry victory. As the biggest seller of Medicare Advantage plans, UnitedHealth was deemed a primary beneficiary. More than one Medicare member in four is in a Medicare Advantage plan.

In February the Department of Health and Human Services surprised insurers by announcing a cut of more than 2 percent per Medicare member for 2014. The industry launched a lobbying and advertising campaign in protest. On April 1, the administration pulled back, announcing that instead of reducing payments it would raise them by 3.3 percent. UnitedHealth’s stock stock rose 8 percent that day and the next.

But in Thursday’s call to discuss the company’s quarterly profits of $2.1 billion on revenue of $30.3 billion, Hemsley said other changes — including the Affordable Care Act’s long-term reduction in Medicare Advantage payments – would still lead to a net reduction next year of more than 4 percent. That’s inadequate when medical costs are rising in the 3 percent neighborhood, he said.

 

The news back in February that private insurers in Medicare would receive a 2.2% rate cut in 2014 sent their lobbyists into overdrive, flooding the halls of Congress and the media with ads bemoaning the reduction in their billions of dollars of federal overpayments.  Historically, private insurers providing Medicare Advantage coverage have collected 13% more from the federal government to provide private MA coverage than it costs to cover seniors in traditional Medicare.  Over the years this massive government subsidy to private for-profit insurers has cost Medicare millions of dollars, so the Obama administration correctly trimmed back those wasteful overpayments as part of the Affordable Care Act, helping to add 8 years of solvency to the program. 

Incredibly the news this week is that the Obama administration has now caved to the insurance industry’s lobbying blitz and Congressional pressure and will not only reverse the 2014 Medicare Advantage cuts but will also give for-profit insurers a 3% raise.  No surprisingly, this is a move that CMS actuaries (the non-politicians actually paid to do this job) opposed:

“The actuaries in charge of the calculation made clear that they did not endorse the change. The official notice, signed by Jonathan Blum, director of Medicare at CMS, and Paul Spitalnic, the chief actuary in charge of the formula, said that the change had come at the behest of HHS Secretary Kathleen Sebelius.”  National Journal

“It’s about the best possible result for Medicare Advantage plans,” said Ipsita Smolinski, managing director at Capitol Street, a health care consulting firm.” Politico

Sure, it’s good news for the nation’s $884 billion dollar a year health insurance industry but what about Medicare? Not so much.  While Medicare Advantage over-payments will still face future reductions thanks to health care reform, this is the classic case of political “If You Give a Mouse a Cookie.”  Will those common sense reductions survive another AHIP lobbying onslaught? It’s also important to note that many of the same members of Congress who have decried Medicare spending and support more means testing, benefits cuts and more for seniors -- all in the name of deficit reduction --  lobbied the hardest to ensure the health insurance industry keeps their government subsidies.  These are subsidies that all seniors, whether they are in a Medicare Advantage plan or not, pay for with higher premiums while also burdening the Medicare program overall. 

For comparison, let’s juxtaposition Congress’ rapid response this week to the insurance lobby’s pressure to keep their goodies with the inaction we’ve seen over months leading to across the board budget cuts in the ongoing sequester.  Budget cuts that are impacting average Americans, not huge for-profit industries.

The Washington Post reports today that the sequester has lead to thousands of Medicare cancer patients being turned away from cancer clinics who can’t afford the 2% sequester cut for drugs needed to treat their Medicare patients.

Cancer clinics across the country have begun turning away thousands of Medicare patients, blaming the sequester budget cuts. Oncologists say the reduced funding, which took effect for Medicare on April 1, makes it impossible to administer expensive chemotherapy drugs while staying afloat financially.

Patients at these clinics would need to seek treatment elsewhere, such as at hospitals that might not have the capacity to accommodate them. “If we treated the patients receiving the most expensive drugs, we’d be out of business in six months to a year,” said Jeff Vacirca, chief executive of North Shore Hematology Oncology Associates in New York. “The drugs we’re going to lose money on we’re not going to administer right now. After an emergency meeting Tuesday, Vacirca’s clinics decided that they would no longer see one-third of their 16,000 Medicare patients. “A lot of us are in disbelief that this is happening,” he said. “It’s a choice between seeing these patients and staying in business.”

Cancer providers have also been lobbying Congress asking for a sequester waiver for cancer drugs so that they can continue providing their life-saving care.  Washington certainly rallied quickly to reinstate massively wasteful government subsidies to one of our nation’s largest industries...yet so far, no response to those who literally control the life and death of thousands of cancer patients in Medicare.

As the battle to cut Social Security, Medicare and Medicaid benefits wages on we thought we’d go into the weekend on a happier note rather than providing the usual Capital Hill war stories and political intrigues.   Here is a quick video we produced to give our community a look at the work the National Committee does here in Washington, D.C. each and every day.  We’ve been fighting to strengthen the nation's most successful retirement and health care programs for 30 years now. 

Our mission has always been to educate, advocate and mobilize. These days, that’s been quite a challenge.  However, thanks to our millions of members and supporters we have been successful in fighting efforts to destroy or privatize these programs. 

So, this is our story...and yours.

 

Today’s release of the GOP/Ryan budget reminds us of the famous line, “the definition of insanity is doing the same thing over and over again and expecting different results.”  Today marks the third time House Republicans have released the Ryan budget, which in Rep. Paul Ryan’s Orwellian terms he’s also named a “Path to Prosperity.” Thankfully the result again this year will likely be the same.  Dead on arrival. We say thankfully because, once again, this budget pretends deficit reduction alone is economic recovery, while ignoring the financial realities millions of America’s middle-class families still face in this slow economy.  This plan also targets seniors in Medicaid with cuts, a “coupon care” plan for Medicare which would ultimately end traditional Medicare, and a fast-track plan to cut Social Security benefits:   

“Once again, House Republicans have re-introduced the same flawed budget approach middle-class Americans have rejected in poll after poll and most importantly at the ballot box. Rather than deal with the true challenges facing this nation including, slow economic growth, high unemployment, and unprecedented income inequality, the GOP/Ryan budget targets middle-class seniors and their families with massive cuts to pay for tax cuts benefiting huge corporations and the wealthiest among us.  Americans want a balanced approach to the national budget.  This cuts-only plan isn’t it.   

The Ryan plan would create vouchers in Medicare leaving seniors and the disabled – some of our most vulnerable Americans – hostage to the whims of private insurance companies.  Over time, this will end traditional Medicare and make it harder for seniors to choose their own doctor.  Vouchers are designed not to keep up with the increasing cost of health insurance… that is why they save money.  If the GOP/Ryan budget becomes law, seniors would immediately lose billions in prescription drug savings, free wellness visits and preventative services provided in the ACA, and the Part D donut hole returns.

Destroying traditional Medicare and leaving millions of Americans without adequate health coverage is not a path to prosperity for anyone except for-profit insurers. The American people understand that.”  Max Richtman, NCPSSM President/CEO

Senate Democrats have also prepared their budget plan which will be released tomorrow. According to Huffington Post, the Democratic Budget plan: 

“... calls for $975 billion in additional revenues through closing loopholes and ending tax expenditures. The budget, unlike Ryan's, doesn't close the door on going beyond the fiscal cliff deal either; it calls for the continuation of current tax rates for middle and lower class Americans but does not specify whether current rates should be protected for high-end earners.

“While House Republicans are doubling down on the extreme budget that the American people already rejected, Senate Democrats are going to be working on a responsible budget that puts jobs and the economy first and reflects the values and priorities of middle class families across the country,” read a statement from Murray.

A top Senate Democratic aide said that the specifics -- including where rates should be set, which loopholes should be closed, and which expenditures should be ended -- would be left to the Senate Finance Committee. The Murray budget does give the Finance Committee some help, though, offering parliamentary instructions (known as reconciliation) to help ensure the tax reform bill it produces will be granted an up-or-down vote.

While the $975 billion figure is ambitious, the Senate aide pointed to a report by the Center for American Progress that showed $1 trillion in savings could be gained through "reducing or reforming tax breaks."

On the spending side, Murray's budget looks for $493 billion in domestic cuts, $275 billion of which will come from health care savings. The aide said that those health care savings, which will also be determined by the Finance Committee, would be felt solely on the provider side and not among beneficiaries. Additionally, the budget calls for $240 billion in defense spending cuts and $242 billion in reduced interest payments.

Those savings in total will replace the sequestration-related cuts that went into effect on March 1. Over a ten-year window, they will reduce the deficit by $1.95 trillion. But since Murray's budget also sets aside $100 billion for economic stimulus measures -- $50 billion on repairing highest transportation priorities, $10 billion on projects of major regional importance and the rest on other items like worker training -- the total savings will be measured at $1.85 trillion.”

These budgets clearly lay out starkly different priority choices.  Especially for middle-class families and retirees who understand first hand the value of programs like Social Security, Medicare and Medicaid, and who want those programs preserved for future generations.  

 

 

 

Time Magazine’s cover story this week is an incredible read and one we highly recommend.  Steven Brill’s “Bitter Pill: Why Medical Bills are Killing Us” provides a remarkably in depth look at our American health care system including Medicare.  Using many personal case studies, Brill breaks down and describes the economic devastation being reaped by our for profit medical industrial complex. 

As we’ve said here repeatedly, America doesn’t face a Medicare crisis -- we face a national health care crisis. Rather than targeting Medicare for cuts we should be using it as the model to improve out health care system nationwide.  As Brill reports:

“Unless you are protected by Medicare, the health care market is not a market at all. It’s a crapshoot. They are powerless buyers in a seller’s market where the only sure thing is the profit of the sellers.”

Consider Time’s example of Susan S. She was 64, one year away from qualifying for Medicare, when she went to the hospital with chest pains.  Her bill for 3 hours of tests and a false alarm was $21,000. If she had Medicare she would have paid less than $500. Compare her costs:

Time’s survey of this same hospital found that in 2010 its total charges were 11 times its actual costs. And that’s not unusual in our current private profit and even non-profit health care system.

Not only does Medicare manage these outrages costs better than the private market, Medicare’s administrative costs are two-thirds of 1% or less than $3.80 per claim. Private Insurers administrative costs run much higher.  Brill reports Aetna’s for example, run 29% or $30 for each claim.

However, Medicare isn’t immune from the skyrocketing costs that are burdening our economy. Brill points out that Congress has tied Medicare’s hands in many instances forcing the more efficient Medicare program to perform like the less efficient private market:

Our laws do more than prevent the government from restraining prices for drugs the way other countries do. Federal law also restricts the biggest single buyer — Medicare — from even trying to negotiate drug prices. As a perpetual gift to the pharmaceutical companies (and an acceptance of their argument that completely unrestrained prices and profit are necessary to fund the risk taking of research and development), Congress has continually prohibited the Centers for Medicare and Medicaid Services (CMS) of the Department of Health and Human Services from negotiating prices with drugmakers. Instead, Medicare simply has to determine that average sales price and add 6% to it.

Similarly, when Congress passed Part D of Medicare in 2003, giving seniors coverage for prescription drugs, Congress prohibited Medicare from negotiating.

Nor can Medicare get involved in deciding that a drug may be a waste of money. In medical circles, this is known as the comparative-effectiveness debate, which nearly derailed the entire Obamacare effort in 2009.

The health care industrial complex spends more than three times what the military industrial complex spends for Washington lobbying. Is it any wonder why so many in Congress have chosen to ignore the true system wide health care problem in favor of targeting Medicare for benefit cuts, arbitrary caps, cost-shifting, means-testing and privatization.

They know what the core problem is — lopsided pricing and outsize profits in a market that doesn’t work.

In spite of this, Congress appears ready to protect that broken health care market that is wrecking our economy in favor of targeting the program that works for cuts -- all in the name of deficit reduction.  Cutting benefits to seniors in Medicare not only ignores the real challenges we face as a nation but it also threatens the health security of millions of Americans.