Tuesday, 23 December 2008
Medicare Advantage Plans
[EDITORIAL NOTE: Pulitzer Prize-winning journalist Saul Friedman writes the bi-monthly Reflections column for Time Goes By in which he comments on news, politics and social issues from his perspective as one of the younger members of the greatest generation. He also publishes a weekly column, Gray Matters, on aging for Newsday.
I don’t wish to alarm you. But did you know that many of people on Medicare - more that 8.6 million of you - are inadvertently helping to kill Medicare? I don’t blame you for not realizing this. I didn’t really recognize the threat early on. But it’s worth remembering.
In 1995, after the right-wing cabal led by new House Speaker Newt Gingrich took over the Congress with its “Contract for America,” I attended a press breakfast with Gingrich’s lieutenant, Richard Armey, of Texas. And during the discussion, Armey told us that among other goals, the new Republican majority intended to “wean our old people away from Medicare.” I did not know exactly what he meant.
Nor did I understand immediately what Gingrich meant when he predicted at a meeting of health insurance executives that the Health Care Financing Administration, which ran Medicare, would “wither on the vine.” What he really meant was that Medicare as we know it would disappear. And now we know how they came close to accomplishing that.
The first step: Over objections from the Clinton administration and by threatening drastic cuts, Republicans and the insurance industry introduced private health care into Medicare and they called it Medicare HMOs.
It didn’t work as well as Republicans had thought. When too many elder got sick, as happens with people of a certain age, and the risk pool dried up, the HMO model didn’t and couldn’t save as much money as expected and still leave room for profits. So the insurers pulled out.
But some damage had been done. Beneficiaries had been drawn in to the convenience and extras offered by the insurers, who tried again with the same game under a different name: Medicare-Plus Choice. And the Medicare Agency had a new name, The Centers for Medicare and Medicaid Services, which was devoted not to Medicare, but to its privatization.
That came under George W., who had called Medicare a “dinosaur.” And what we got in 2003 was the Medicare Modernization Act (Tip: anytime a program is “modernized” or “reformed” to give you “choices,” watch out).
The MMA, which literally was passed under cover of darkness with the critical help of AARP, gave us the well-known and widely hated privatized Part D drug “benefit,” which depends on private insurers and the drug manufacturers and is outside traditional Medicare. It’s as if Republicans took seriously that canard, “I don’t want the government in my Medicare” for Medicare was given almost no role and, as you know, cannot even bargain for lower drug prices.
But even more insidious than Part D, with its infamous doughnut hole, is the fine print in the MMA. Did you know, for example, about the 45 percent trigger, which prohibits Medicare costs from exceeding 45 percent of general revenues? That’s meant to permanently stunt Medicare’s growth. Worse than that, the MMA introduced means testing for the first time, hitting more affluent beneficiaries with higher Part B premiums, which was designed to drive them away from Medicare.
But worse still, Medicare HMOs, Medicare Plus Choice was given new life in Medicare Advantage, and this time the Republicans sought to guarantee the insurers profits by giving them subsidies which will amount to more than $15 billion a year over the next decade, which has helped lure 20 percent of the 43 million Medicare beneficiaries away from traditional Medicare.
I know, buying a Medicare Advantage policy is more convenient and may seem cheaper than signing up for a separate Part D plan plus a Medigap policy to supplement traditional Medicare. But every recent independent study suggests Medicare Advantage is not a great bargain, after you count premiums, co-payments for every doctor or lab you visit and for the drugs you take - and the doughnut hole.
According to the Center for Economic and Policy Research, even with the benefits, out of pocket spending for people with Medicare Advantage plans continue to climb, along with drug prices and premiums.
But more important for the future of Medicare, according to the Commonwealth Fund, the government is spending for each Medicare Advantage enrollee nearly $1,000 or 12.4 percent more than it spends on traditional Medicare, or a total of $8.5 billion in extra payments.
But that extra money doesn’t necessarily buy you the same health security as straight Medicare. For not only does your Medicare Advantage provider require you to use doctors and hospitals in their networks, there is also no guarantee that the company will see you through an illness like cancer, failing kidneys or heart bypass surgery.
I’ve heard from too many patients and doctors who must fight for coverage they thought they had. Indeed, I know of major hospitals that won’t accept Medicare Advantage. To top off the tales of Medicare Advantage, Rep. Pete Stark, a California Democrat, released a Government Accountability study earlier this month that reported the Medicare Advantage plans, which did $91 billion in business this year, earned $1.3 billion more in profits than they expected in 2006. That’s money out of Medicare’s pocket.
I apologize for such a long story, but it’s necessary that you know that the new Congress and president hope to continue and go further with last year’s effort to roll back some of the more damaging provisions of the 2003 law. Democrats were able to reduce the subsidy payment to Medicare Advantage providers. The Medicare Rights Center asked the Congress to eliminate the extra payments to the Medicare Advantage plans. And the newly formed Alliance to Restore Medicare, which I’ve mention in another post, also wants to take Part D away from private insurers and place it under Medicare, end the means testing which penalizes higher income beneficiaries and repeal the 45 percent trigger.
Most seniors organizations have sent their wish lists to the office of president-elect and his health care appointees. But so far the largest organization, AARP, has not been heard from and a spokesman referred me to its well-advertised Divided We Fail campaign. Characteristically, it takes no specific position, which leaves it free, as in 2003, to compromise Medicare.
[At The Elder Storytelling Place today, a Christmas poem from Ellen Younkins titled Santa Baby.]