MEDICARE’S DEATH SPIRAL
By Richard Davis
Americans who rely on Medicare for comprehensive health insurance are being assaulted by the forces of the American insurance industry. It’s nothing new. In 2003 the Medicare program was revamped and a new product, Medicare Advantage (MA), was created.
MA was created to privatize the Medicare insurance program and it is succeeding. People are lured in by low premiums and add-ons such as gym memberships and other lifestyle benefits. But MA is not the kind of insurance you want when you get sick. It works a lot like a managed care plan, meaning it is not portable from state to state and a lot of claims end up being denied that would have been easily accepted by traditional Medicare (TA).
I have been writing about this sad state of affairs for a number of years hoping that enough politicians would want to work to preserve TA and not bolster the profits of insurance companies but that is not happening. Bernie Sanders and a few advocacy organizations such as the Physicians for a National Health Plan have been tirelessly fighting the MA juggernaut but it is moving unabated.
The best effort that us ordinary people can make is to tell all the seniors we know as much as we can about the differences between TA and MA. Once the facts are laid out it becomes clear that preserving TA is what should happen. We also have to emphasize that if the rush to MA continues then Medicare will no longer be a government-run program and American seniors could be entirely at the mercy of private insurance company gatekeepers.
It is also important to realize that insurers have been defrauding the government as they try to game the system with MA. All of the sources I found made it clear that, “Overpayments to Medicare Advantage plans could exceed $75 billion in 2023. A new analysis from the USC Schaeffer Center for Health Policy and Economics warns that overpayments to Medicare Advantage plans now exceed 20% — or $75 billion — per year, underscoring the urgent need for reform.”
The federal government has tried to levy fines and go after a few of the culprits but it has become clear that paying fines is considered the cost of doing business in a world where breaking the law is prudent business practice.
Consider these facts from the Physicians for a National Health Plan (PNHP). “MA is highly profitable for insurers, with gross margins per enrollee averaging $1,730 in 2021, far above other types of insurance. Some insurers like Humana are leaving employer-based insurance entirely in favor of programs like MA. Since its inception, MA has always cost more for each enrollee than would’ve been spent in TM. At its peak in 2009, MA spent 18% more per patient for the same services. One method of extracting money from Medicare that corporations have been caught using is “upcoding,” adding irrelevant or false diagnoses to patient charts to increase payments. According to the government, 8 out of the 10 biggest MA insurers have submitted inflated claims. Four of the biggest five have faced federal lawsuits for doing so.”
Sadly, the current and former Presidents have supported the growth of MA plans and they have easily dismissed the fraud and abuse because they rely on the insurance industry to pay for large parts of their political campaigns. Most seniors do not know enough about TA and MA to get worked up about it but if there were a more concerted educational effort there could be enough political momentum for change. Politicians know that seniors vote in high numbers and that is a power we need to exploit.
Here are some more facts from PNHP to help you understand just how bad MA is. “MA plans have highly limited networks. 35% of enrollees are in a plan that covers less than 30% of physicians in their county. On average, plans cover less than half (46%) of physicians in a county. Specialty and surgery coverage is even lower in MA. Psychiatry was the lowest, with only 23% of psychiatrists in a county covered on average. 20% of plans offered a choice of fewer than 5 cardiothoracic surgeons. MA plans often require prior authorization for necessary care, with over 35 million requests submitted in 2021. These requests are frequently denied, but when appealed, 82% of denials are overturned. Despite this, only 11% of requests are ever appealed.
Some insurers have used artificial intelligence to systematically deny requests. Government investigations found that around 1 in 7 denials in MA should have been covered and would have been covered by Traditional Medicare. Those with complex or high-cost care needs often must leave MA because of narrow networks, prior authorizations, and other denial strategies. Among those in long-term nursing home care from 2010-2011, 17% switched from MA to TM, and only 3% switched from TM to MA.”