Monday, October 11th, 2010
A recent — and mostly inaccurate — news story sent some seniors into a panic. Last month Harvard Pilgrim Health Care announced it would drop Medicare Advantage at the end of this year. Immediately, many “pundits” blamed the new health care reform law, and newspaper headlines screamed that Medicare Advantage was being killed by “Obamacare.”
Medicare Advantage plans are administered by private insurance companies, but Medicare pays the private insurer a set amount per person covered. The new health care reform law is cutting this subsidy. And now it seemed the private companies were starting to drop Medicare Advantage!
But the fact is that Harvard Pilgrim’s decision had nothing to do with the new health care reform law. Instead, the company had a problem with another piece of legislation, the Medicare Improvements for Patients and Providers Act (MIPPA), which passed in 2008 over President Bush’s veto.
MIPPA provides that after the end of 2010, Medicare will no longer subsidize private fee for service (PFFS) plans, but only HMO plans. Harvard Pilgrim CEO Eric Schultz told Maggie Mahar of the Century Foundation that the MIPPA would have forced the company to radically restructure its First Seniority Freedom Plan to become an HMO, and company executives decided it would be better for their bottom line to just drop the plan altogether.
When MIPPA was passed in 20o8, almost 2 million Americans were in Medicare Advantage fee-for-service plans. So why is it ending? The problem with these plans was that they do not control cost as well as HMOs. The MIPPA is expected to save taxpayers several billion dollars over the next few years.
But it’s no wonder many seniors are nervous about what might happen to their Medicare policies. It’s a sad fact that as we age, nearly all of us will suffer increasing problems with our health. Some ailments — heart disease, arthritis — are common, and some are rare, such as mesothelioma cancer, which is rarely diagnosed before the patient is 50. Private insurance companies don’t want seniors as customers — unless taxpayers are supplying the profits.
In recent years Congress has passed many bills that will impact Medicare in complex ways, but between sloppy journalism and politicians trying to demagogue issues to scare people into voting for them, most of us aren’t getting the facts. Right now, anyone who is still covered by a Medicare Advantage free-for-service policy needs to find out what will happen to that policy.