Medicare Advantage Overpayments
Undermining Traditional Medicare, Shortchanging Beneficiaries

July 17, 2007

 
NEWS RELEASE

Congressional policy staff and members of the media were briefed on Capitol Hill today on Medicare Advantage overpayments and their effect on the Medicare program. Three of the nation's leading healthcare advocacy organizations were joined by Health Subcommittee Chairman Rep. Frank Pallone (D-NJ) who stated:

"The over-payments made to Medicare Advantage are a gaping hole that is draining the Medicare trust fund and imposing unfair costs on millions of beneficiaries across the nation. The time has come for Congress to put an end to these subsidies to ensure that Medicare remains a reliable source of health care for the elderly and disabled for many years to come." 

Thousands of letters from National Committee members calling on Congress to pass legislation, which would repeal billions in insurance industry overpayments, are being sorted for delivery to Capitol Hill later this month. The President of the National Committee and former Congresswoman, Barbara Kennelly told the audience:

"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.  The vast majority of Medicare beneficiaries remain in the traditional program.  But their voices are not as loud as the insurance industry's". 

According to the Congressional Budget Office, private insurers offering Medicare Advantage plans will collect $75 billion dollars this year alone and $1.31 trillion over the next decade. That's funding which could have gone to Medicare but is now going to the insurance industry instead. Judith Stein, Executive Director, Center for Medicare Advocacy, Inc . says:

"Medicare wasn't broken. But because of the ever-increasing private Medicare options, it is. The solution for the Medicare crisis is not to increase the eligibility age or decrease benefits, but to stop privatizing the program at the expense of older people and taxpayers."

Rev. Sandra Butler-Truesdale, President of the Campbell Heights Resident's Association, described how D.C. seniors became victims of a private insurer's marketing pitch that puts sales ahead of seniors' care. Campbell Heights seniors were promised the private plan wouldn't replace Medicare, there were no co-pays and they could stay with their own doctors. None of that is true.

"We are now in limbo, waiting 45 days to be placed back in Medicare. What do we do if we need care within those 45 days? Most hospitals are in trouble financially and don't want to admit patients without medical insurance. What do we do?"

Richard Deem, Senior Vice President of Advocacy with the American Medical Association says

"Congress can stop Medicare cuts to doctors and preserve seniors' access to care by eliminating overpayments to private health insurers providing Medicare Advantage plans. These subsidies are making Medicare less sustainable as the baby-boom generation reaches Medicare eligibility"

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.

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.

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Media Inquiries to:
Pamela Causey 202-216-8378/202-236-2123
Kim Wright 202-216-8414

http://www.ama-assn.org                                  www.ncpssm.org                        www.medicareadvocacy.org