Hot Air and Medicare
Monday, October 1st, 2012
In the last post, we flashed back to 2010 and the dire predictions that Obamacare would kill the Medicare Advantage program. Those predictions turned out to be false, at least so far.
The politicians and pundits whose predictions didn’t pan out are not deterred. Now they say that Medicare Advantage will disintegrate sometime after 2014. Could they be right this time? Or are they still full of hot air? Further, some Republicans in Congress claim that the Obama Administration is propping up Medicare Advantage with additional payments until after the November election.
At the beginning of 2012, about 11 million seniors were enrolled in Medicare Advantage. This is about one-fourth of all Medicare recipients. American seniors, including those with serious illness such as mesothelioma, depend on Medicare for their medical care, and the future of the program is one of the hottest topics in the presidential campaign.
What’s going on here? First, there’s a lot of confusion about what in Medicare Advantage was cut, and why. The Medicare Advantage program pays private insurance companies to enroll seniors in managed care health plans. So the plans are subsidized by our taxes, which go directly to the private insurance companies. The original idea was that private insurance companies would, through competition and efficiency, be able to offer better plans for less money than the government bureaucracy could offer. But that’s not how it turned out.
In fact, the Medicare Advantage plans were costing taxpayers about 14 percent more than regular Medicare plans. These overpayments were not paying for seniors’ health care but were being taken as company profits and administrative overhead. The Affordable Care Act provides that insurance companies offering Medicare Advantage policies have to bring their costs to taxpayers down to be in line with regular Medicare. It is estimated that this will save taxpayers $308 billion over ten years.
But people who opposed Obamacare began shrieking that Obamacare was gutting Medicare and killing Medicare Advantage. How dare we save taxpayers $308 billion!
Put another way — the politicians behind Medicare Advantage who believed that the private insurance industry would do a better job of managing a cost-effective Medicare program were outraged when the government refused to pay more tax dollars than we pay for regular Medicare plans. Go figure.
But the Medicare Advantage companies continue to sell policies and continue to make a profit. Medicare Advantage enrollment is rising, and long-time enrollees aren’t seeing big changes in their policies. So what’s the problem now?
The Affordable Care Act includes a program to reward insurance companies doing an especially good job, as measured by good health care outcomes, with a bonus payment. But the Obama Administration decided to broaden the criteria for performance outcomes, and so more bonuses are being given.
This has Republicans up in arms, because they claim the bonus money is being used to cover up the damage being done to Medicare Advantage by Obamacare. Rep. Darrell Issa, R-Calif., chairman of the House Oversight and Government Reform Committee, says that the Health and Human Services (HHS) department is engaged in a conspiracy to hide the impact of the cuts to Medicare Advantage. He is threatening to subpoena documents from HHS. HHS Secretary Kathleen Sebelius is stonewalling Congress and refusing to comply with congressional requests, he says.
Could this be true? Maybe, but Issa has a record of stirring up controversial claims against the Obama Administration that turn out to be overblown. The bonus program controversy may turn out to be more hot air.
