The annual lobbying extravaganza by the multi-billion dollar private insurance industry which sells Medicare Advantage
plans to seniors, will enter a new phase tomorrow when the Centers for Medicare and Medicaid Services announces it’s 2016 rate schedule
. Lobbyists (America’s Health Insurance Plans alone spent nearly $5 million in just six months last year) have been in hyper-drive convincing Washington that trimming their billions of dollars in federal subsidies is the same as cutting seniors’ Medicare benefits. It’s not. But all that lobbying has paid off so far because not only have the proposed single-digit cuts been avoided; they’ve been replaced with rate increases:
“The Obama administration turned a proposed 1.9 percent cut to 2015 Medicare Advantage health plans into a .4 percent increase after heavy lobbying from insurers and the Hill. It was the second-straight year that the Medicare agency transformed a proposed rate cut into a raise. Still, Medicare Advantage enrollment has grown every year since the ACA passed in 2010. In fact, enrollment has increased more than 9 percent each year since 2012, when the ACA’s cuts to the Medicare Advantage started to take effect. The law is supposed to cut payments by $156 billion over 10 years because the program has historically reimbursed private insurers at a higher rate than the traditional Medicare program. Private plans are reimbursed at 106 percent of the traditional program, and Obamacare aims to close this gap.” Washington Post
Except that gap will never be closed as long as the powerful insurance industry is allowed to pretend that a 1.9% cut in their federal overpayment is unreasonable to ask from companies with financial reports like these:
“Revenues at Humana for 2014 climbed 17.4% year over year to $48.5 billion. Meanwhile, reported premiums and services revenues increased 9.2% to $3.1 billion, primarily on the back of an increase in average group Medicare Advantage membership.”
“UnitedHealth Group’s full year 2014 revenues of $130.5 billion grew $8 billion or 7 percent year-over-year. UnitedHealthcare growth was led by strength in the public and senior sector.”
Let’s not forget that these giveaways to private insurers, covering just one-third of Medicare beneficiaries, are being paid for by taxpayers and the majority of seniors who don’t even participate in a private MA plan. The fact that these subsidies exist is terrible public policy. The fact they continue to be protected by lawmakers is indefensible. Especially when you consider the mounting evidence that the only advantage to Medicare Advantage plans is to the $884 billion dollar a year health insurance industry.
Reports of Medicare Advantage fraud continue to surface. Whistleblowers (including a former Bush administration official) have filed more than a half-dozen federal court cases detailing systemic over-billing by private Medicare Advantage insurance companies.
The Center for Public Integrity has investigated MA plans in depth. It reports CMS officials acknowledge billions of dollars have been improperly paid to private MA plans due to a practice called “upcoding” in which insurers exaggerate how sick their patients are to increase their “risk score” and collect higher Medicare reimbursements. Some of CPI’s other findings include:
- Risk score errors triggered nearly $70 billion in “improper” payments to Medicare Advantage plans from 2008 through 2013 — mostly overbillings, according to government estimates.
- Risk scores of Medicare Advantage patients rose sharply in plans in at least 1,000 counties nationwide between 2007 and 2011, boosting taxpayer costs by more than $36 billion over estimated costs for caring for patients in standard Medicare.
- In more than 200 of these counties, the cost of some Medicare Advantage plans was at least 25 percent higher than the cost of providing standard Medicare coverage.
- In 2012, CMS audits of six plans found that private insurers couldn’t justify payments for 40 percent or more of their patients. Those overpayments alone cost the Medicare program nearly $650 million in 2007. That’s just for six plans for one year.
- The Government Accountability Office reports Medicare Advantage plans collected $3 - $5 billion in “excess payments” over just two years (2010-2012) because of private insurers “upcoding.”
- A new Government Accountability Office investigation is now underway continuing its look into MA “upcoding” fraud which, by some estimates, has provided an $70 billion dollars of improper payments to private insurance companies.
This is just the fiscal side of what the privatization of Medicare has meant. Now let’s consider what beneficiaries in Medicare Advantage plans have faced. Unfortunately, that news is also disheartening.
- The Center for Medicare Advocacy reports there is evidence that private insurers are “cherry picking” healthier seniors for their plans to keep costs down (and profits high.) “A recently released CMS report confirms advocates’ fears by concluding that disenrollment by individuals from MA plans back to traditional Medicare ‘continues to occur disproportionately among high-cost beneficiaries, raising concerns about care experiences among sicker enrollees and increased costs to Medicare.’”
- The Kaiser Family Foundation says that “Since 2012 average out-of-pocket spending limits have been on the rise, which could expose a subset of enrollees to higher costs – mainly those who have significant medical needs.” Again, that means older and sicker seniors.
- These rising premiums are confirmed by the industry itself in a survey distributed to lawmakers. Incredibly, the insurance lobby uses their premium hikes as justification for Congress to protect private insurers’ massive subsidies.
“The sickest patients who need the most care have seen their maximum annual out-of-pocket costs increase by as much as $761 since 2012, according to the study, which was conducted by the actuarial firm Milliman for the Better Medicare Alliance advocacy group. The value of extra benefits that the health plans provide fell by a national average of $180.24 from 2012 to 2015.” Congressional Quarterly
It’s hard to imagine how our political leaders can justify preserving federal over payments to private insurers in Medicare with a track record that looks like this. However, if early media reports are correct that’s exactly what’s likely to be announced tomorrow – federal subsidies to one of the wealthiest industries in America’s will be preserved while taxpayers and seniors in Medicare will continue to foot the bill.
This week America’s wealthiest will make their last contribution to the Social Security system for 2015. The rest of us...middle class and the working poor...will continue to pay 6.2% of every dollar we earn to keep Social Security strong. How can this be?
So, the payroll tax cap means the wealthy will never have to contribute on all of their income, just the first $118,500 (in 2015). Because most Americans never earn that much in a year, many don’t even realize this unfair tax cap exists or the devastating effect it’s having on Social Security’s long-term fiscal outlook:
“... the Social Security trust fund, which currently holds $2.8 trillion, is projected to be drawn down by about 2033 (according to the Social Security trustees). After that point, if no changes are made to the program, retirees will receive only about 75 percent of scheduled benefits. One of the main causes of this projected shortfall is the growth in inequality over the last 30 years. Back in the 1980s, the last time changes were made to Social Security, Congress and President Reagan decided to build up the trust fund with workers' payroll taxes in order to essentially pre-fund the coming retirement of the Baby Boom generation.
As a result, the trust fund has been steadily building up over the decades, but they weren't able to predict how much income gaps would widen over that time. So while the payroll tax cap has been adjusted for inflation every year, the income of the richest workers has increased faster, allowing more and more earnings to escape the tax, and causing the payroll tax to collect less than needed.” Nicole Woo, Center for Economic and Policy Research
It’s no coincidence that conservatives who constantly clamor for cutting Social Security benefits never list raising or eliminating the payroll tax cap as an alternative solution to strengthening Social Security. Once again, for America’s 1% and their supporters in Congress, middle-class benefits cuts are always the preferred solution.
“I found an even more glaring example of the vast inequity of the Social Security tax system a couple of years ago when I was reading a report issued by an association of CEO’s here in Washington. The report made recommendation to “fix” Social Security by cutting benefits, cutting the Social Security cost of living adjustment, raising the retirement age…no mention of the payroll cap. I was curious about the membership of this group and after a little research I did the math and discovered that one member of their executive committee reached the cap and stopped paying FICA tax after lunch on New Years Day. Earning $54 million dollars a year allows you to do that…but doesn’t make it right.” Max Richtman, NCPSSM President/CEO
The National Committee proudly moderated a Capitol Hill event today with Senator Bernie Sanders (D-I), Rep. Jan Schakowsky (D-IL) and the Strengthen Social Security Coalition bringing attention to this Social Security payroll tax giveaway provide only to the richest people in America each year.
The Center for American Progress released a new report today analyzing what America’s income inequality has meant for Social Security’s funding. First, some historical background...when the 1983 Greenspan Commission passed its Social Security reforms 90% of American workers paid on all of their annual income. In other words, only 10% were exempted from the payroll tax cap. Since then, our nation has seen more and more income shifted to the wealthy meaning there are 6 times the number of millionaires and billionaires today compared to 1983 and more people above the tax cap. That’s means America no longer collects the Social Security payroll taxes from 90% of workers...today it’s only 83%. CAP reports that’s more than a trillion dollars lost.
“Had 90 percent of covered wages been taxed from 1983 to 2013, the OASDI trust funds would have been $1.1 trillion larger by 2013, shrinking the 75-year expected shortfall by 10.1 percent.
The simulation that we have modeled is retrospective; it addresses what would have happened had 90 percent of wages been taxed since 1983. In their annual report, the Social Security trustees answer a similar, but prospective, question: How would raising the cap to cover 90 percent of earnings starting in 2015 affect the trust funds’ shortfall? The trustees find that over the 75-year period, this change would close about 27 percent of the expected shortfall in the trust funds.”
As Center for Economic and Policy Research Co-Director, Dean Baker, told the crowd today, “Social Security isn’t broke...America’s economy is.” Contrary to the current GOP divide and conquer messaging, American seniors aren’t stealing money from children’s programs and the disabled aren’t bankrupting the Social Security retirement system. Conservatives don’t want average Americans to see the truth -- our economic policies have shifted the nation’s wealth to the wealthy and away from everyone else.
House Republicans have voted more than 50 times to rollback or fully repeal the Affordable Care Act. They did it again yesterday. While it feels like Bill Murray’s movie “Groundhog Day” it’s not even close to funny for the millions of Americans this repeal would hurt.
Seniors have probably been the most demagogued group when it comes to what the ACA actually means to their health care. Remember those fake “death panels” you were assured were a part of health care reform? They weren’t. The ACA also didn’t “destroy Medicare” as promised by opponents. Quite to the contrary, seniors in Medicare have benefitted from a number of important improvements since its passage. This success is exactly why the conservatives in Washington remain desperate to repeal health care reform before evidence of the ACA’s success can no longer be buried in a mountain of their false claims and political hysteria.
Medicare beneficiaries will save, on average, $5,000 over the next ten years thanks to health care reform provisions. Here are just a few of the real-life benefits millions of seniors in Medicare would lose immediately if Republicans have their way and repeal the Affordable Care Act. You can see even more in our NCPSSM brief.
- No out-of-pocket costs for preventive services like colorectal and mammogram screenings and annual wellness visits
- 50% discount for brand name drugs purchased while in the Part D donut hole, leading to the closure of the donut hole entirely
- $700 in covered drug costs for the average senior would be lost and the sickest seniors would face $3,600 in additional out-of-pocket costs
- Reduction of billions in overpayments to private insurers in Medicare and a new requirement that 85% of every dollar is spent on healthcare rather than costs/profits
- $200 per year in premiums and $200 in out-of-pocket costs to be saved by seniors by the year 2018
- $350 million in fraud-fighting investment
- Medicare Trust Fund will lose years of solvency
Of course, seniors in Medicare aren’t the only ones this repeal would hurt. Here’s a list
of what losing the Affordable Care Act means for Americans of every age.
Reaction from National Committee to Preserve Social Security and Medicare President/CEO, Max Richtman on the President's Budget:
“We’re glad to see President Obama respond to the GOP majority’s Social Security hostage-taking by including language in his 2016 budget allowing the routine rebalancing of the Trust Funds. Threatening people with disabilities with a 20% benefit cut unless there are broader Social Security benefit cuts plays politics with the livelihoods of 11 million Americans and their families rather than resolving this imminent funding issue. We applaud the President for taking a stand against this Social Security ploy. The President also included increased funding for the Social Security Administration which is desperately needed by an agency that’s been forced to reduce local office hours, cut back on consumer services, and increase the wait time for disability hearings. We urge Congress to approve this Social Security Administration budget.
While the President’s budget thankfully no longer includes cuts to Social Security, through the Chained-CPI proposal, his 2016 plan unfortunately still targets seniors by shifting more costs to Medicare beneficiaries through increased means-testing, premium hikes and co-pays. While some tout increasing means testing in Medicare as a way to insure ‘rich’ seniors pay their share, the truth is, the middle-class will take this hit as well.
Medicare has been means-tested since 2007 and the number of beneficiaries subject to higher premiums has been increasing. If passed, the President’s means testing proposal will hurt middle-class individuals and flies in the face of his budget theme of ‘middle-class’ economics. The economic realities facing America’s middle-class retirees are ignored by these provisions which shift even more costs onto seniors and exacerbate the retirement deficit gap millions of Americans face now and into the future. These Medicare proposals are especially worrisome given the fact that with the new GOP majority in Congress, passage of these cost-shifting plans can happen with a simple majority vote in the Senate posing a serious threat to millions of American seniors.” ...Max Richtman, NCPSSM President/CEO
Chances are if you, or anyone in your family, is 65 or older your life has been impacted by an Older Americans Act program. From Meals on Wheels to senior centers, prevention of physical and financial abuse, computer training to legal assistance, OAA programs touch the lives of millions of seniors and their families. This myriad of programs provide
s home and community-based services making it possible for older adults to remain independent, but they’ve continually faced flat or shrinking budgets at a time of growing needs. Funding programs that allow seniors to age in place is cost-effective; however, Congress has not reauthorized these programs since 2010.
Tomorrow, legislation to reauthorize OAA will be considered by the Senate Health, Education, Labor & Pensions (HELP) committee . We’ve urged the Senate to pass this reauthorization:
“S. 192 builds on the core programs of the Older Americans Act (OAA) – including congregate and home-delivered meals, help for family caregivers, transportation and senior center services - which enable older adults to remain as independent as possible. We support provisions in S. 192 that protect against elder abuse and strengthen long-term care ombudsman services, as well as programs such as fall prevention and chronic disease self-management that promote healthy living. OAA services help seniors avoid hospitalizations and nursing home care, and, as a result, save federal and state funds that otherwise would be spent on such care. In addition to reauthorizing OAA programs, increasing OAA funding is crucial to meet the growing needs of seniors and to compensate for the lack of adequate funding over past years, a funding shortfall that was aggravated by the sequester.”
We’ve created a video to introduce Members of Congress to the real-life impact their decisions have on average American seniors.
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