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Will the Facts Finally Trump Fiction?


by Barbara B. Kennelly, President/CEO

How wonderful it is to finally hear the truth about what’s really happening with the privatization of Medicare expressed so clearly and persuasively in the halls of Congress. Specifically I’m talking about the House Budget Committee hearing on Medicare Advantage plans held this morning. As I testified to Chairman John Spratt and the rest of the Budget committee members today, our 4 million members and supporters are committed to the preservation of Social Security and Medicare.


At a time when Americans are being told we “can’t afford” Medicare and Social Security it’s ridiculous to continue paying private insurers billions of dollars in subsidies equaling approximately $1,000 more a year for each beneficiary than traditional Medicare currently pays. These insurance industry subsidies will cost taxpayers $149 billion dollars over the next decade and cut two years from Medicare’s solvency. These subsidies must go.

Congressional Budget Office Director Peter Orszag and Mark Miller, the Executive Director of Medicare’s Payment Advisory Commission, offered compelling and indisputable evidence that the insurance industry has reaped the benefits of these massive subsidies yet there’s little evidence of the promised efficiencies and savings for beneficiaries. In fact, Medicare beneficiaries are paying $24 a year in higher Part B premiums just to fund excess payments to private plans.

Since the passage of the Medicare Modernization Act (MMA) of 2003, Medicare has been undergoing a transformation into a privatized program. This legislation is a weapon aimed at the heart of traditional Medicare. It was designed to accomplish the goal expressed by former Speaker Newt Gingrich – to lure seniors voluntarily out of Medicare so that it would eventually wither on the vine. The overpayments to Medicare Advantage plans the committee explored today are just one of the tools in the MMA to achieve this end.

I cannot overstate the damage these Medicare Advantage overpayments will cause to the traditional Medicare program if they are not eliminated. Ultimately, overpaying MA plans will shatter the risk pool that makes Medicare work. Medicare Advantage plans tend to attract healthier seniors because of their benefits. As more of these seniors are lured out of traditional Medicare, they leave behind the frailest and most vulnerable to pay higher and higher premiums. Also, as MA enrollments grow, so do taxpayer subsidies. Over time, this cycle will cause Medicare to become unaffordable – for both taxpayers and beneficiaries.

At a time when our nation is struggling with how to create affordable health care coverage for all Americans, it is simply incomprehensible to me why we would destroy the one affordable, universal health care system that already exists in Medicare.

Medicare Privatization Finally Hits the Radar

When the Bush administration first tried to sell the privatization of Social Security, the American people ultimately saw through the political marketing blitz and put a stop to private account plans designed to turn Social Security over to Wall Street. Unfortunately, by the time the President's Social Security privatization road show stalled out two years ago, the privatization of Medicare had already begun quietly and beneath the radar thanks to passage of the 2003 Medicare Modernization Act. Now seniors and taxpayers are paying the price for that privatization legislation.

With billions in subsidies going to the insurance industry, a substantial portion of which comes from premium hikes, and two years lost from Medicare’s solvency; many in Congress, the press, and the public finally understand what the privatization of Medicare really means. The Los Angeles Times has a good overview:


“Healthcare providers contended that the private sector was more efficient, so they could provide more for less. But as it turns out, the private Medicare Advantage plans provide more for more, costing the Medicare system 12% to 15% more than traditional government-run Medicare costs, said Maria Freese, director of government relations at the Committee to Preserve Social Security and Medicare, a Washington advocacy group. Eliminating Medicare Advantage plans, in which about 20% of Medicare recipients have enrolled, would give the system about two additional years of solvency.”

The Senior-Spectrum also highlighted the issue and quoted NCPSSM President/CEO Barbara Kennelly:


“The Administration’s goal is clear … to stack the deck in favor of a Medicare program run by private insurance companies allowing the destruction of the traditional program seniors have depended on for decades,” said Kennelly. “Congress must level the playing field, and it can start by eliminating these corporate giveaways.”

Congressional hearings in the House and Senate continue and we expect there will be legislation on Medicare Advantage overpayments later this year.

The Spin Makes Our Heads Swim

The Washington Post continues its love fest for the so-called "Fiscal Wake-Up Tour", Comptroller General David Walker's traveling troupe of the "sky-is-falling-we-must-cut-entitlements" think tankers. Here's an excerpt from Thursday's article:

"The numbers make Joseph Farrell's head swim. Billions and trillions of dollars, numbers too immense to comprehend."
Of course they are. That's the whole point of lumping together Medicare, Medicaid and Social Security in these presentations, even though the challenges facing each program are as different as the solutions. Let's be honest, the numbers just wouldn't be as incomprehensible or scary if we talked about Social Security (a retirement program facing long term issues) and Medicare/Medicaid (healthcare programs facing a more immediate crisis in concert with a national healthcare crisis) on their own terms. This shock and awe approach is clearly not designed to provide solutions. In fact it appears the end result is just the opposite:

"I knew there was a problem, but I didn't realize it was this bad," Farrell,25, marveled after a recent presentation at the University of South Florida, from which he is to graduate in August. "I didn't realize there was no solution in sight. My taxes are going to be huge."

No solutions in sight? You've got to be kidding. Is that really the message being left by these Paul Reveres for reform? There are scores of Social Security reform options out there. Some more politically viable than others. Here's just one example from Robert Ball, Social Security Commissioner under Presidents Kennedy, Johnson and Nixon. A simple Google search will lead you to countless more.

As for Medicare, here's an obvious solution offered yet again by Congressional Budget Office Director Peter Orszag...nationwide health care reform. You can link to video of his testimony Thursday before the Senate Budget Committee and Congressional Quarterly's coverage. He said:

“The rate at which health care costs grow relative to income is the most important determinant of the long-term fiscal balance; it exerts a significantly larger influence on the budget over the long term than other commonly cited factors, such as the aging of the population.”

In other words, the President's claim that aging baby-boomers are sucking the nation dry through sky-rocketing entitlements does not tell the whole tale. But it certainly makes great headlines.

Are We Supposed to Say Thank You?

Friday the Centers for Medicare and Medicaid Services and Insurance industry lobbyists had their News Releases written, statements prepared and happy faces ready to announce their great news...7 insurance copanies which sell private Medicare "Advantage" plans have voluntarily agreed to stop marketing them. This is "spin" for we got caught with our hands in the cookie jar so we better propose a fix more to our liking than the one Congress will impose on us.

These insurers, many specifically accused of defrauding and manipulating seniors nationwide into private Medicare plans they can't use or afford, or worse illegally signing seniors up without their knowledge, say they'll now be take a voluntary marketing break until CMS is sure these plans are actually following the law. Shouldn't CMS have been doing this from the beginning? Shouldn't these "controls" have been in place and enforced before coast to coast headlines and Congressional hearings detailing thousands of cases of marketing fraud made this nationwide scandal too much even for the insurance industry to ignore? For seniors who were unwillingly shifted out of Medicare and into these private plans, those controls might have saved them untold grief and expense.

Is this voluntary (and temporary) marketing ban the only price these private companies will pay for this widespread con of American seniors? Here's what CMS said in it's release:


“While we note that most health insurance agents are helpful and responsible in describing and explaining choices to beneficiareis, there are a few bad actors that need to be removed from the system for good," said Leslie V. Norwalk, Esq., Acting Administrator of CMS. "This voluntary agreement demonstrates that CMS and the plans are stepping up to ensure that deceptive marketing practices end immediately, and that beneficiaries understand what they are purchasing."


Not surprisingly, this late awakening to the need for oversight isn't impressing everyone on Capitol Hill. Including Ways & Means Health Subcommitte Chairman Pete Stark who is quoted as saying:


"The administration's response is to allow private companies to determine which crimes they'll plead to and which sentences they'll serve. This will do virtually nothing to protect Medicare beneficiaries and is a pathetic attempt to pre-empt congressional action."

And so, seniors probably won't be sending out any "Thank You" cards to CMS and the insurance industry just yet.

Medicare "Advantage" only an Advantage for Insurers

As we've predicted, seniors enrolled in Medicare are feeling the affects of privatization legislation, called the Medicare Modernization Act, passed four years ago. We've released a new analysis today of how private Medicare Advantage plans are eroding traditional Medicare in favor of a privatized system subsidized by billions of federal dollars which go straight to insurers. Entitled: “Attack on Medicare: Private Health Plan Subsidies Windfall for Corporate America” this report finds:

· Even though they promised better benefits at lower costs than traditional Medicare; private insurers are actually being paid about $1,000 more for each beneficiary covered by private plans.

· These government subsidies will cost the federal government $149 billion dollars over the next decade. These overpayments will also cut two years from Medicare’s solvency.

· Not all of these subsidy dollars are being used to improve benefits. A significant portion goes straight to insurers rather than seniors. Meanwhile, every Medicare beneficiary (even those not in private plans) is paying $24 a year in higher premiums to pay for these industry subsidies, and that number will continue to rise.

Our President/CEO, Barbara Kennelly, joined other senior's groups and Medicare advocates on Capitol Hill today urging Congress to repeal these unfair corporate overpayments and rollback the privatization of Medicare before it’s too late. She says:

“Rome is already burning. Our members nationwide are paying higher premiums, facing larger out-of-pocket costs and being aggressively sold private plans which often do not even provide the coverage they need. The administration’s goal is clear…to stack the deck in favor of a Medicare program run by private insurance companies allowing the destruction of the traditional program seniors have depended on for decades. Congress must level the playing field and can start by eliminating these corporate giveaways.”


This methodical destruction of traditional Medicare is happening with so little attention on Capitol Hill it's frightening. For groups like ours the challenge now is to wake up Washington to what seniors all over this country are painfully discovering...the privatization of Medicare is certainly good for business but not for seniors who need inexpensive and dependable healthcare.



   

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