Blog #142- 1/4/23
MEDICARE THREAT IS ESCALATING
By Richard Davis
Seniors continue to flock to enroll in Medicare Advantage plans. Most don’t know that they are helping to convert the program into just another private insurance plan. The insurance companies have been able to lure people in with low cost or no premiums and enticements that seem to good to be true.
There is a reason that the insurance industry advertising blitz has been so pervasive and relentless this year. Insurance companies are reaping higher profits from Medicare Advantage and, even though there is a high level of fraud and abuse, the companies committing these crimes simply pay fines and make it part of “just doing business”.
The Physicians for a National Health Program (PNHP) has been one of the few activist organizations working hard to educate the public about the threat to Medicare and to provide factual information about what is going on. They have launched a new effort to get the word out and I am extracting some of the more important points.
They note that the two programs, Direct Contracting (DCE) and REACH, pose the greatest threat to traditional Medicare. PNHP explains that “To understand Direct Contracting and REACH, it’s important to understand the first wave of Traditional Medicare privatization through Medicare Advantage. Traditional Medicare (TM) provides beneficiaries the free choice of any doctor or hospital, and reimburses providers at a set rate for their services. Because of TM’s simplicity, the program spends 98% of its funds on patient care, and only 2% spent on administration.”
“Medicare Advantage (MA) is run mainly by commercial insurers for profit. Medicare pays MA insurers via “capitation,” a lump sum per enrollee; then MA insurers must spend 85% of those revenues on patient care, keeping the other 15% as overhead and profit. Taxpayers spend $321 more per year to cover a senior through MA compared to TM. Annual gross profit margins for MA plans averaged $1,608 per enrollee between 2016 and 2018. MA insurers are able to achieve these high profits in two key ways: 1) maximizing the payments they receive from Medicare and 2) minimizing what they spend on patient care.”
Sadly, the Biden administration is supporting efforts that move Medicare away from the public sector and into private hands. They paid lip-service to the DCE threat by rebranding it as REACH. According to PNHP, “Despite the rebranding, REACH retains all the most dangerous elements of DC: investor- owned middlemen who can pocket up to 40% of Medicare payments as profit and overhead; automatic enrollment of beneficiaries who must change providers to opt out; opportunities to increase profits by “upcoding” and restricting care; and the potential to expand privatization to all of Traditional Medicare.”
What this all means in everyday terms for people who enroll in Medicare Advantage is that they are now subject to the gatekeeper model of managed care for the most part. They must seek prior approval for many referrals and procedures. Their new insurers make money by denying care and that means that an MA enrollee may no longer have coverage for cancer treatment or other diseases that are costly to treat and they will certainly have bills that they could not anticipate.
Traditional Medicare participants pay up to about $5700 a year for Medicare Part B and a supplemental Medigap policy as well as deductibles. The cost is fixed and they will be covered 100% for all care. They can go anywhere in the country for care and they do not need referrals for specialists.
MA enrollees may end up paying no premiums and think they are getting a free ride. When they use their insurance they will be subject to co-pays and deductibles that range from $6000-$10,000 a year or more. They never know how much their care will cost unless until they use it and wait for the bills to come in. Many will have to fight denials of care and they have to stay within insurance company mandated networks.
The insurance industry is relying on advertising saturation and offers that seem to good to pass up. They know that most people will not do the research to find out that they are hurting themselves and destroying the traditional Medicare program. Get educated and activated before it’s too late.
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