CBO Director Peter Orszag offered insurers some advice yesterday they probably didn’t want to hear. He told attendees at the American Health Insurance Plans conference on Medicare that insurers should present data showing what is working in Medicare’s overpaid and highly subsidized private Advantage plans.

Private insurers have been promising for decades they could provide cheaper and more efficient coverage for seniors than Medicare. But they’re currently charging Medicare $1,000 more a year to cover a beneficiary in a private plan than it would cost to provide care to that same beneficiary under traditional Medicare. So far, private insurers can’t (or won’t) show us what we’re actually getting for that subsidy. Here’s Congress Daily’s coverage:

CBO has determined through a review that disease management programs mightreduce some healthcare costs, but the savings are offset by the costs of preventative measures, such as screening. "I know a lot of private practitioners have a different view, and I would say, show us the data," Orszag said at an American Health Insurance Plans conference on Medicare...Because the
interventions are not backed up by evidence,they drive up cost without improving health or outcomes," Orszag said.

MedPac’s estimates, that in the case of Private Fee-For-Service plans, only about half of these excess payments are used to deliver extra benefits for enrollees. The rest finances administrative costs, marketing, and profits. This is the elephant in the AHIP conference room Orszag had the courage to acknowledge.

Don’t forget that CBO has also said we could save $54 billion over the next five years and $149 billion over the next ten years if we just paid private plans the same rate as Medicare. Not only would eliminating these large overpayments save billions of dollars, it would also add two years of solvency to Medicare’s trust fund.