The Continuing Threat To Medicare

Blog#99- 2/18/22

By Richard Davis

A few months ago I talked about a threat to the traditional Medicare program beyond the threat that Medicare Advantage poses to the public nature of the program. That threat is called Direct Contracting Entities (DCEs).

The Trump administration initiated the DCE change to push Medicare in the direction of privatization. That kind of move is going to chip away at the equality and near-universal access that Medicare offers because private insurance companies will be more in control of how health care is delivered and paid for.

We should have learned our lessons from the pandemic and realized that a big part of the reason that the U.S. has the highest number of deaths from COVID-19 has to do with the nature of our for-profit health care non-system. People who have money have better health care than poorer people and people of color who suffer and die at greater rates than white and affluent Americans.

The health care profiteers are reaping higher profits than ever and taking advantage of the pandemic. COVID vaccine manufacturers have recorded their highest profits. It is shameful and immoral that the Biden administration is doing almost nothing to stop the further privatization of American health care.

The Physicians for a National Health Program (PNHP) has been publicly vocal about the harm that not only Medicare Advantage, but also DCEs, are doing to the health and welfare of Medicare beneficiaries.

Dr. Susan Rogers, President of PNHP, recently testified before Washington politicians and she has submitted a letter on behalf of PNHP to Xavier Becerra, Secretary of the U.S. Department of Health & Human Services.

In that letter Rogers stated, “We are a group of 24,000 physicians and other health professionals who are deeply concerned about a threat to Traditional Medicare (TM). The Direct Contracting (DC) pilot program, initiated under President Trump but continued under President Biden, is handing control of TM (traditional Medicare) beneficiaries’ health care to third-party middlemen called Direct Contracting Entities (DCEs); DCEs include firms controlled by commercial insurers, for-profit hospital and dialysis chains, and private equity investors. Last night, a group representing the DCE industry sent you a letter asking you to fix, not end, the program, arguing that ending DC now would undermine the work of the CMS Innovation Center (CMMI). Quite the opposite: DC has tarnished the reputation of CMMI, CMS, and HHS, and ending the program would demonstrate a commitment to improved integrity and the best interests of beneficiaries.”

AARP notes on its web site that, “…Direct Contracting is increasing the hold of Wall Street and the world of private equity on Medicare. The Centers for Medicare and Medicaid Services say 53 companies have signed up and have been approved to administer the program, which began earlier this year. They are, for the most part, a mix of publicly traded health-care companies and insurers, and private equity backed start-ups.”

“The lure of Direct Contracting for these companies is potential profits. The limits on the amount of money a Direct Contracting entity can keep that’s not used for a patient’s medical needs is significantly more generous than those imposed by Medicare Advantage. And while patients choose to sign up for Medicare Advantage themselves, with Direct Contracting, the primary care doctor, not the patient, enrolls in the program. And why would a doctor sign on? Well, one participant, Clover Health Partners, says doctors can earn upward of 40 percent more on primary care visits through the program. (When I asked about that, a spokesperson for Clover told me the higher pay did not affect how much Clover earned from Medicare.)”

DCEs will most likely continue unless there is a big public outcry. Not very likely, considering that this program has flown under the radar for so long. This means that the U.S. health care system will become more costly and harder to access. People will suffer and die because this country is deciding that profits are more important than people’s lives.

Nothing new.

Comments | 1

  • DCEs

    Thank you for publishing this, Richard. You nailed it: it’s all about profits, not human life. I am on traditional Medicare and am furious that I could be forced into a Direct Contracting Entity and ultimately have some profiteer reduce my–and others’–access to care. And if this succeeds, Medicare for All will no longer mean public healthcare for all. It will make Medicare into just another marketplace.

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