Font Size

From the category archives: privatization

New Medicare Advantage Rates Preserve Insurance Industry Subsidies...Again

For the second year in a row, America’s massive health insurance industry lobby launched a Washington lobbying and advertising blitz hoping to scare seniors into believing they’ll lose their Medicare and politicians will lose their seats if the industry’s government overpayments aren’t protected.  Mission accomplished. Rather than trimming rates, the Obama administration raised them:

“Private Medicare plans would see a 0.4 percent boost in their payment rates for 2015 under a final rate announcement made by Centers for Medicare and Medicaid Services officials Monday.

Officials with Medicare said the better-than-expected news for insurers came about in part as a result of healthier enrollees signed up for both Medicare Advantage and traditional fee-for-service plans, which means less of a cost burden on the health insurance system for the aged.” Congressional Quarterly

When CMS says “in part” what they aren’t mentioning is the part where the administration basically caved (for the second year in a row) to the insurance industry’s million dollar lobbying blitz to keep its billions of dollars of federal overpayments intact.   

“Today’s announcement by CMS to, once again, preserve government overpayments to private insurers in Medicare Advantage is bad policy and bad economics for the Medicare program. These subsidies were supposed to be gradually trimmed in order to expand benefits and improve the quality of care for all seniors in Medicare. However, each year the insurance lobby threatens to cancel coverage or charge more to seniors in MA plans rather than accept a reduction in their overpayments or reimbursement rates. 

For many years, private insurance companies have claimed they can provide better coverage to seniors at a lower cost.  The reality proves otherwise.  Since 2003, all seniors in Medicare (including those not even enrolled in Medicare Advantage) have paid higher premiums to help fund the billions in government overpayments to private Medicare Advantage insurance companies.  Over the years, as much as 14% more per beneficiary has been paid to MA plans than is paid to cover individuals enrolled in traditional Medicare.  It’s a wasteful federal boondoggle that was rightfully corrected by passage of the Affordable Care Act (ACA) in 2010.  Additionally, thanks to the ACA, growth in health care costs have been decreasing which means that reimbursement rates also go down.   As reimbursement rates have decreased, MA plan enrollment has increased. 

Let’s be clear, contrary to the health insurance industry’s massive lobbying campaign claims, Medicare doesn’t make the decision about cuts to seniors’ MA coverage, including increasing premiums or reducing access to doctors. That decision rests squarely in the board rooms of the nation’s private insurance industry, which is unwilling to give up a penny of their government giveaway in favor of continued threats of diminished coverage and higher premiums for seniors.

This annual drama with private insurers in Medicare proves, once again, that when private MA plans are unwilling to compete on a level playing field with traditional Medicare, seniors will ultimately pay the price. So much for providing better coverage for less.”...Max Richtman, NCPSSM President/CEO 

White House Continues Playing “Let’s Make a Deal” with the GOP on Social Security & Medicare Benefit Cuts

Just two months ago, the Obama White House vowed it wouldn’t be sucked into debt ceiling negotiations with Republicans again.  “Thank goodness” we all said, since that debacle ultimately led us to the ongoing budget mess and sequester which continues to hurt American families nationwide.

“Gene Sperling, director of the National Economic Council, told reporters that the president "simply is not going to negotiate on the debt limit." The Hill

Hmmm....Guess what? The White House has been meeting behind closed doors with Republicans ever since then doing exactly that...negotiating with Republicans about which middle-class benefits will be cut in order to head off another GOP led hostage taking over the debt ceiling.  Clearly, past is prologue.

Here’s what the National Journal reports today:

“At least a dozen Republican senators are regularly meeting with President Obama’s top aides in an attempt to plot a way forward on the looming fiscal challenges facing leaders this fall, senators involved in the meetings tell National Journal.

The meetings, which began after Obama hosted GOP senators for dinner earlier this year, are the first sign that Democrats and Republicans are in talks to strike a deal that would reduce the deficit and reform entitlements and taxes.

Republicans plan to use the debate over raising the debt limit to force Democrats to cut spending—a negotiation Obama has said he won’t engage in. But these meetings demonstrate that the president is in fact engaging Republicans in a broader discussion about debt and spending.

An administration official said White House aides have made clear to Republicans that the president’s offer from December—including $600 billion in new tax revenue for $400 billion in Medicare and other health care cuts—still stands.

Republicans are open to $600 billion in revenue, Burr said, but want to see it come from a mix of entitlement and tax reform. And the GOP opposes Obama’s $400 billion in Medicare cuts, arguing they want more structural reforms.”

Just in case you’ve forgotten, those “structural reforms” actually end traditional Medicare and put seniors at the mercy of private insurance companies, dramatically increasing their health care costs and limiting their choice of doctors.  What Republicans want is passage of the Ryan/GOP budget, which is nothing more than “CouponCare” which gives seniors a coupon to go buy their health coverage from private insurance companies. The American people don’t support “CouponCare” yet the Republicans in the House have introduced this plan three times and clearly hope President Obama will give them what the Senate will not.  

And then there’s President Obama’s plan for Social Security and Medicare, which isn’t to be applauded either. He proposes cutting Social Security benefits for current and future retirees, veterans and the disabled plus raising taxes on the middle class through the Chained CPI.  

“Cutting benefits by adopting the chained CPI would cut the COLA by 3% for workers retired for ten years and 6% for workers retired for twenty years. This cut targets both current and future retirees. Three years after enactment, this translates to a benefit cut of $130 per year in Social Security benefits for a typical 65 year-old. The cumulative cut for that individual would be $4,631 or more than three months of benefits by age 75. While supporters claim the chained CPI is more accurate; you have to ask yourself, if this chained CPI really is more accurate, then why the need to offer an incremental benefit “bump” to some beneficiaries?  The answer is simple. The chained CPI does not accurately measure these groups’ expenses; in fact, it makes most of the same errors as the current formula and adds a few.  Adoption of this new formula is really about cutting benefits and raising taxes on average Americans to reduce the deficit.” Max Richtman, NCPSSM President/CEO

In a letter to the White House Max also told the President:

"The 'chained CPI' is not a 'technical tweak,' and no amount of rationalization can make it so. In reality, the chained CPI is a benefit cut for the oldest and most vulnerable Americans who would be least able to afford it. To offer to trade it away outside the context of a comprehensive Social Security solvency proposal ignores the fact that Social Security does not even belong in this debate because it does not contribute to the deficit. Cutting Social Security benefits to reduce the deficit is unacceptable to the vast majority of Americans across all ages and political affiliation."

On Medicare, President Obama also supports even further means-testing which will ultimately hit middle-class families, not just “wealthy seniors.”

“Proposals to expand Medicare means testing include increasing income-related premiums under Medicare Parts B and D until 25 percent of beneficiaries are subject to higher premiums.  A study from the Kaiser Family Foundation found that this would affect individuals with incomes equivalent to $47,000 for an individual and $94,000 for a couple if fully implemented in 2014 – meaning it would reach many middle-income Americans.”

So, everything old is new again.  President Obama is negotiating with the GOP all over again and middle-class benefit cuts are the only thing we know for sure is on the table.  You have to wonder, where are Congressional Democrats?!



$2.1 Billion Quarterly Profits Still Not Enough - Private Insurers Want Washington to Give Them Even More

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.


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.


When is a Medicare Cut Not a Cut? When You’re One of the Nation’s Biggest Lobbyists – Health Insurance Companies

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.

The National Committee: Our Story

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.


Pages: Prev1234567...24NextReturn Top

Get the Latest

Indicates required fields


Have a Social Security or Medicare question?


Media Contacts

Pamela Causey
Communications Director 216-8378
(202) 236-2123 cell

Kim Wright
Assistant Director of Communications
(202) 216-8414

Entitled to Know

Medicare's Top 10


Copyright © 2014 by NCPSSM
Login  |