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Who Needs Health Care Reform...We Have ER's

Breaking down President’s Bush words is always a mind-boggling task, in fact some would argue it could probably be a job unto itself. For that reason, we don’t usually go there.

This time however, the President’s view on healthcare reform...delivered before a friendly audience of Cleveland business leaders (the meeting wasn't open to the public) this week...can’t be ignored. You can read the full White House transcript but here's one key quote. He said:

“The immediate goal is to make sure there are more people on private insurance plans. I mean, people have access to health care in America. After all, you just go to an emergency room.”

There you have it folks. Forget skyrocketing health care costs, forget the millions who can’t afford insurance, forget the fact that this administration is unprepared and unwilling to make the investments necessary to prepare for an aging nation. After all, we have emergency rooms, right?

We highly recommend you watch the whole speech to appreciate the President’s single-minded “business-good, government-bad” approach to health care reform.

by Barbara B. Kennelly, NCPSSM President/CEO

Imagine starting a business with a guaranteed 12 percent to 50 percent federal subsidy not available to your competition. The cost of that subsidy is then passed on to your competitor's customers. And finally, let's add restrictions to your competitors that don't apply to your new business. Sounds like a sweetheart deal, right? It is. It's called Medicare Advantage, the privatized Medicare plan created by the insurance industry, passed by Congress in the Medicare Modernization Act of 2003 and now enrolling millions of seniors nationwide.

Private insurers offering Medicare Advantage plans will collect $75 billion this year alone and $1.31 trillion over the next decade, according to the Congressional Budget Office. That's federal funding which could have gone to Medicare but is now going to the insurance industry instead. These private plans are paid $1,000 more a year for each beneficiary than the government pays for seniors enrolled in traditional Medicare. The independent Medicare Payment Advisory Commission estimates that every Medicare beneficiary is paying $24 more per year for their Part B premiums just to subsidize these private plans. So, even though 81 percent of Medicare's beneficiaries have chosen to remain in traditional Medicare, they are now paying extra premiums to cover the 19 percent who've chosen the private plans. These billions of dollars in overpayments have also cut two years from Medicare's solvency.

Insurers and privatization supporters in Washington defend Medicare Advantage plans claiming better service at a lower cost. The overpayment price tag certainly casts doubt on the cost argument. And, as we saw with the Part D prescription drug benefit, there are mixed results with the quality of service. MedPAC reports that in the case of private fee-for-service plans, only half of the excess payments to insurers are being used for extra benefits to seniors. The other half goes directly to insurance companies' bottom lines. And even though private plans are required to cover everything Medicare covers, they often impose higher cost-sharing requirements than traditional Medicare for benefits such as hospitalization, home health care and skilled nursing care. This means more out-of-pocket costs for seniors, many of whom don't even realize it until faced with a serious health crisis.

Congress is now reconsidering the future of these massive subsidies. Not surprisingly, the insurance industry lobby is geared up and launching its full assault to protect the spoils it won with the passage of MMA 2003. The industry's political case was slowed somewhat with recent news reports that seniors from coast to coast have been defrauded by Medicare Advantage salesmen luring them out of traditional Medicare into private plans their own doctors wouldn't accept or the seniors couldn't afford.

A recent survey of state insurance agencies found 39 of 43 states had received complaints about Medicare Advantage misrepresentations. While the industry claims the complaints are from "a few bad eggs" it promises to crack down on; in fact, the marketing abuses are inevitable in a system designed to reward enrollment numbers. And in an effort to persuade Democrats in Congress, the insurance lobby now claims low-income and minority seniors will suffer if these overpayments are stopped. Conveniently, their data ignore the large number of these beneficiaries currently receiving Medicaid.

A recent analysis by the economists at the Center on Budget and Policy Priorities found that low-income and minority beneficiaries are far more likely to receive coverage through Medicaid than Medicare Advantage plans. In fact, only 14 percent of Asian Americans, 13 percent of African Americans, and 25 percent of Hispanics are enrolled in private plans. The lifeline for Medicare Advantage is the insurance lobby and the billions of dollars it has convinced Congress to pump into industry coffers at the expense of seniors. Insurers have threatened to cut their Medicare Advantage plans if Congress halts the flow of excess payments. However, if Medicare continues to fund large subsidies to private plans, the program will face even more pressure to cut benefits and increase out-of-pocket costs for beneficiaries. Traditional Medicare will be eroded while private plans continue to collect billions in subsidies and beneficiaries pay more of the high costs of healthcare.

Advantage ... insurers.

It's time to stop disadvantaging Medicare. End these costly subsidies to insurance companies and put that money to work for all of the 43 million Americans enrolled in Medicare not just the few enrolled in private plans.

This OpEd can also be seen in the July 10th Hartfort Courant.

Healthcare and Medicare...Inextricably Linked

As the years pass and healthcare costs continue to skyrocket unchecked, it’s become clear we can’t fulfill our goal of preserving Medicare without system wide healthcare reform. So, that brings us to the universal healthcare debate. The Bush administration opposes this idea because, as we’ve seen with the privatization of Medicare and the on-going attempts to privatize Social Security, this administration’s basic philosophy can be summed up this way: Government oversight…bad. Private industry control…good. Economist Dean Baker says:

"The debate is silly, because the level of government involvement is not the issue. The real issue is the extent to which the health care industry – the insurance companies, the drug companies, and the medical equipment companies – will be allowed to rip off the public.

The government does not have to dictate anything. It can just give people a choice that they don’t currently have: specifically the option for every individual and employer to buy into a government-run Medicare type plan. Such a plan would likely offer care at a considerably lower cost than private insurers since it won’t have to pay high CEO salaries, marketing expenses, and dividends to shareholders. That is why the traditional Medicare program always wipes the floor when it competes on a level playing field with private insurers. (This is also the reason the private insurers insist on large subsidies from Medicare – they can’t compete.)"

Dean goes on to talk about the privatization of Medicare, Part D and industry subsidies which are speeding Medicare’s insolvency while pouring billions into insurers coffers. His full post is on TPM Cafe and is a must-read for anyone interested in healthcare reform, Medicare and the price we’re all paying for this administration’s privatization policies.

Remember Pensions?...Far Too Few Do

by Maria Freese, NCPSSM Government Relations
& Policy Director

Senator Tom Harkin has introduced Pension legislation, the Restoring Pension Promises to All Workers Act, which we hope will ultimately become law.

Social Security was never designed to be the only source of a person’s income in retirement – it was always intended to be one income stream out of 3 in retirement – the other two being income from traditional pensions and income from individual savings. This so-called 3-legged retirement stool is coming under increasing pressure.

Unfortunately, we all know that coverage in traditional pension plans is dropping as only about 20% of today’s workers in the private sector are covered by defined benefit plans. And although coverage in 401k plans is growing, the average balance in the 401k plans of workers in the last decade prior to retirement is only about $60,000. If it weren’t for the run-up in housing values – many workers would be facing retirement with few assets available to finance it.

Senator Harkin’s legislation addresses a number of inequities in our pension system. The provisions he includes won’t help everyone but for the people they do affect, his bill could represent the only thing standing between them and living a life of poverty in retirement.

For workers caught in the globalization wars who are pawns in the game of mergers and acquisitions, the Harkin bill could keep them from losing half their pensions as workers caught up in a recent Halliburton re-shuffling did. For widows and divorced spouses of federal workers, the Harkin bill would help take the gamble out of survivor and retirement annuities, closing several longstanding loopholes that wipe out the pension benefits of some spouses of federal employees.

While it seems as though these glitches in the pension system should be easy to fix because they are so egregious, in fact they are not. Getting them passed will take the commitment of someone like Senator Harkin who believes now is the time to finally right these wrongs.

The National Committee commends Senator Harkin for taking on this challenge. And we look forward to working with him to get the Restoring Pension Promises to All Workers Act signed into law.

Did You See?

There's been some some good coverage of Chairman Stark's introduction yesterday of important Medicare Advantage legislation. We're regular readers of the "Medicare Monitor " blog and Larry Lipman describes this legislation, designed to prevent these private Medicare Advantage plans from charging more than traditional Medicare. You can also see coverage from Stark's home district in the Inside Bay Area blog called "Political Blotter".

Also, here's another Medicare privatization primer if you're interested in more details about Medicare Advantage plans and the privatization of Medicare.



Have a Social Security or Medicare question?


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Walter Gottlieb
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