Yves here. This post provides an important, detailed takedown of the travesty known as Medicare Advantage. If you are in the US and watch what I call old people TV (syndicated classics and crime shows), you’ll be bombarded by Medicare Advantage come-ons at this time of year. The fact that Medicare Advantage is profitable enough to support close to blanket-level commercials should tell you that not enough of the premium dollars are going for health care.
Medicare Advantage is serving as a second-tier scheme for budget-stressed Social Security recipients, since many plans are nominally “no fee,” as in there is no deduction from Social Security payments, unlike for Medicare B (doctor coverage) and D (prescription coverage). But since there is no such thing as a free lunch, the lack of premiums is recouped via skimpier coverage.
But even worse, the health insurance industry hopes to increase the market share of Medicare Advantage and eventually displace traditional Medicare, and it has far too many supporters in Congress and the Administration.
Please circulate this post widely, particularly to those of Medicare age. And in particular, exhort recipients to contact their Congresscritters and support legislation (“The Medicare for All Act of 2023” House Bill, (H.R. 3421, and Senate Bill S. 1655, which would end Medicare Advantage, as well as the stealth private insurer takeover of traditional Medicare via Direct Contracting Entities and REACH plans, described in detail below.
Also note the shout out to Michael Hudson!
By F. Douglas Stephenson, LCSW, is a retired psychotherapist and former instructor of social work in the University of Florida Department of Psychiatry. He is a member of Physicians for a National Health Program. Cross posted from Common Dreams
Wendell Potter, a New York Times bestselling author, highly respected healthcare and campaign finance reform advocate, and authority tackling corporate and special interest propaganda, alerts us to the dangers of Medicare Advantage plans now offered by the private health insurance industry.
“In just a few weeks,” says Potter, “we’re once again going to be bombarded with ads featuring healthy and happy-looking seniors playing tennis and telling us how wonderful their Medicare Advantage plan is and how much of a no-brainer it is to shun traditional Medicare and opt instead for a plan operated by a big corporation like Humana and Cigna. We’ll hear insurers’ shills tell us about the extra benefits we’ll get, like discounts on gym memberships; $900 for groceries; and some coverage for dental, vision, and hearing. They’re short on details of course, and we never hear that coverage for those extra things can be pretty meager.”
Potter adds, “We also never hear about the potentially deadly side effects of Medicare Advantage plans. Make sure that insurers’ pitchmen—like ‘Broadway Joe’ Namath—are more forthcoming about what we’ll be getting ourselves into if we do as he suggests. Why should he be allowed to leave out important (Medicare Advantage) details we better know about before we sign on the dotted line?”
How Medicare Advantage Plans Differ From Conventional Medicare
- They are owned and operated by for-profit, private insurance corporations;
- Unlike traditional Medicare, Medicare Advantage plans often refuse to pay for treatments and medications physicians prescribe;
- Unlike traditional Medicare, many physicians, other healthcare professionals, and hospitals will be off-limits to patients because Medicare Advantage companies create their own proprietary and often skimpy “networks” of healthcare providers;
- If patients go out of network, they could be on the hook for thousands of dollars out of their own pocket; and
- They likely will have to pay extra—often a lot extra—for some of those extra benefits.
Private Health Insurance Industry Dominates
The for- profit, private insurance industry thoroughly dominates our national health insurance system and defines the basic concept and purpose of health insurance . The U.S. private business model of health insurance defines insurers as commercial entities, and maximize profits by mainly limiting benefits, maximizing health policy premiums, or by not covering people with health problems. Like all businesses, their goal is to make money. Under the business model, the greed of casual inhumanity is built in and the common good of the citizens and nation is ignored; excluding the poor, the aged, the disabled, and the mentally ill is sound business policy since it maximizes profit.
Political Support for Private Health Insurance Industry
Because our government permits private health insurance companies to exact large profit from its citizens, Wall Street banks and investors who back Big Insurance turn public money into a bonanza of private riches. High health insurance costs are the result of a political decision to essentially allow Big Insurance to do what they want and charge whatever they want. It’s no wonder so many beholden members of Congress want to protect the interests of their donors, Big Insurance and Big Pharma, industries that spent $371 million on lobbying in 2017.
The website/blog The Lever reported that The Better Medicare Alliance, an advocacy group for Medicare Advantage plans,
spent $570,000 lobbying Congress in the first quarter of this year, nearly double the $330,000 spent in the prior quarter. All told, the four major publicly traded health insurance companies that operate Medicare Advantage plans, as well as the insurance lobby America’s Health Insurance Plans, spent nearly $19 million on federal lobbying in the first quarter of 2023, a 66% increase from the prior quarter, according to a Lever analysis of data from OpenSecrets.
U.S. political and oligarch support for privatization of health insurance is grounded in the philosophy espoused by University of Chicago economist the late Milton Friedman. Friedman said, “The corporations should not take into account the public interest,” and added that “the government itself should not take into account the public interest. The job of the government is to simply let everybody make as much money as they can, however they can.”
In contrast, classical economist Michael Hudson notes that Big Insurance doesn’t want any kind of anti-monopoly legislation:
Essentially you have what is called a free market, as advocated by Milton Friedman. A free market means the wealthiest people dominate the market and the supply of credit, the management of the economy that allocates credit, and who gets what shifts from Washington to Wall Street. It shifts from the government to the private financial sector, and allows the financial sector to do the planning. One problem with this is the financial sector lives in the short run. So, it means that they only look for the next three months, the next year’s balance sheet, because the free market is so complex you don’t know what’s going to happen. Well, of course, since you’re managing it from Wall Street you in reality do know what’s going to happen, but you don’t want to tell people exactly what’s going to happen.
Big Insurance Profiteering Statistics
Wendall Potter reports on recent profiteering by Medicare Advantage plans:
- Big Insurance revenues and profits have increased by 300% and 287% respectively since 2012 due to explosive growth in the insurance companies’ pharmacy benefit management (PBM) businesses and the Medicare replacement plans called Medicare Advantage.
- The for-profits now control more than 70% of the Medicare Advantage market. In 2022, Big Insurance revenues reached $1.25 trillion and profits soared to $69.3 billion. That’s a 300% increase in revenue and a 287% increase in profits from 2012, when revenue was $412.9 billion and profits were $24 billion.
- Big insurers’ revenues have grown dramatically over the past decade, the result of consolidation in the PBM business and taxpayer-supported Medicare and Medicaid programs.
- What has changed dramatically over the decade is that the big insurers are now getting far more of their revenues from the pharmaceutical supply chain, Medicare, Medicaid, and from taxpayers as they have moved aggressively into government programs. This is especially true of Humana, Centene, and Molina, which now get, respectively, 85%, 88%, and 94% of their health-plan revenues from government programs.
- The two biggest drivers are their fast-growing pharmacy benefit managers (PBMs), the relatively new and little-known middleman between patients and pharmaceutical drug manufacturers, and the privately owned and operated Medicare replacement plans marketed as Medicare Advantage.
- Huge strides in privatizing both Medicare and Medicaid have been made. More than 90% of health-plan revenues at three of the health industry companies come from government programs as they continue to privatize both Medicare and Medicaid, through Medicare Advantage in particular. Enrollment in government-funded programs increased by 261% in 10 years.
Voters Don’t Matter
The voters don’t matter because the American definition of democracy is oligarchy, where a small group exercises control especially for selfish purposes. Polls have shown large popular support by citizens for Medicare for All, but neither political party nor Wall Street donors have supported it. Michael Hudson writes that by “conquering the brains of a country by shaping how people think, you can twist their view into ‘unreality economics’ and make them think you are there to help them and not to take money out of them, then you’ve got them hooked.” This is how Big Insurance and Big Pharma maintain control of U.S. health insurance. Our system is privatized, financialized, and unregulated so that private, big insurance companies can make money.
The assumption that whatever the market produces is rational and functional is the bedrock of Western economies. “And it’s wrong,” says Hudson, “because It negates the fact that you really need some government power strong enough to override the self-serving special interests of oligarchs and other 1% corporate interests. And that takes a very strong government, which is why the free market /privatization people have always opposed strong government and why their economic models don’t give any acknowledgement for government investment in infrastructure that Biden wants or any government activity that is able to override that of the 1% rentier class, the financial class, the property-owning class, and the corporate monopolists. That’s the problem we have.”
Private profit “Medicare Advantage” and “REACH” plans present new threats to Traditional Medicare.
1. What Is Medicare Advantage?
Medicare Advantage is a program offering private health insurance plans as options to replace traditional Medicare. Medicare Advantage plans differ from traditional Medicare in that they are paid with capitation (per member), they are required to limit enrollees’ out-of-pocket spending, and can offer extra benefits (e.g. gym memberships, $900 worth of groceries, dental benefits). They almost always offer prescription drug coverage and use a defined and often restricted network of providers that can require enrollees to pay more for out-of-network care. Utilization management techniques are used, such as prior authorization, and they can also fund special programs such as rewards for beneficiaries to encourage healthy behaviors. The hope is that these differences will lead to improved care at lower cost compared to Traditional Medicare.
In reality, “Medicare Disadvantage” is a better, more accurate name for the programs however, as insurance companies push Congress to corporatize all of Medicare, yet keep the name for the purposes of marketing, deception, and confusion.
Dismantling Medicare With Medicare Advantage: Over 50% of Medicare beneficiaries now have for-profit corporations in charge of their care through Medicare Advantage (MA). Insurance companies are paid handsomely for these plans, and much of that money goes to corporate profits instead of care. The companies running MA plans want to take over Medicare entirely, leaving patients with no option but to give their money to private insurers.
Denying Treatment: Investigations into claim denials in MA found that insurers were inappropriately denying treatments and tests that should be covered under Medicare. Physician surveys show that these practices often cause patients to suffer unnecessarily, and can even be life-threatening. In some cases, MA insurers were found to spend just seconds on each claim, and even denied claims using artificial intelligence instead of medical experts.
Deceiving Patients and Taxpayers: Reports from journalists, researchers, and government agencies have shown that health insurance companies like UnitedHealth and Cigna overcharge Medicare by giving patients exaggerated or entirely false diagnoses. Several companies have been fined, or sued, and agreed to large settlements. MA insurers are taking citizens’ tax dollars for conditions they aren’t even treating.
Bottom Line: Medicare Advantage is not the same Medicare program that Americans have come to know and love. The private insurance industry has spend millions on advertising in order to hide the ugly truth: Their MA plans raid taxpayer funds and routinely fail to deliver the care that patients expect and deserve.
Terminate Medicare Advantage: Physicians for a National Health Program, concludes that the Center for Medicare Services (CMS) should terminate the Medicare Advantage program. It would be far more cost-effective for CMS to improve traditional Medicare by capping out-of-pocket costs and adding improved benefits within the Medicare fee-for-service system than to try to indirectly offer these improvements through private plans that require much higher overhead and introduce profiteers and perverse incentives into Medicare, enabling corporate fraud and abuse, raising cost to the Medicare Trust Fund, and worsening disparities in care. These problems are not correctable within the competitive private insurance business model, and the Medicare Advantage program should be terminated.
2. What Is a ‘Direct Contracting Entity’ and ‘REACH’?
This program hands traditional Medicare to Wall Street by inserting a profit-seeking middlemen in Traditional Medicare to “manage” care for seniors and people with disabilities, allowing companies to keep up to 40% of what they don’t spend on care as overhead and profit. Beneficiaries are assigned. without their knowledge or consent. automatically to a ‘Direct Contracting Entity’ (DCE) if their primary care physician has joined one. The only way for beneficiaries to opt out is to find a different primary care physician.
Profits Over Patient Care: Profits are put ahead of patient care by virtually any type of company to be a Direct Contracting/REACH middleman, including commercial insurance companies, private equity investment firms, and other Wall Street profiteers. DCE’s expand profiteering to all of Medicare. Direct Contracting companies have already enrolled 1.8 million beneficiaries, with plans to take over all of Traditional Medicare in the next decade.
Terminate DCE’S and REACH: It would be far more cost-effective for CMS to improve traditional Medicare by capping out-of-pocket costs and adding improved benefits within the Medicare fee-for-service system than to try to indirectly offer these improvements through private plans that require much higher overhead and introduce profiteers and perverse incentives into Medicare, enabling corporate fraud and abuse, raising cost to the Medicare Trust Fund, and worsening disparities in care. These problems are not correctable within the competitive insurance business model, and the DCE/REACH program should be terminated.
Free Ourselves From Profiteers
We now have several decades of experience with the conversion of health and mental healthcare into a business. Our healthcare is being rationed, with care guidelines determined by profitability and secrecy decided in private Wall Street corporate boardrooms. To realize large profits demanded by Wall Street investors, our health system must attract the healthy and turn away the sick, disabled, the poor, many of the old, and the mentally ill.
To maintain corporate control of U.S. healthcare insurance, our system is privatized and unregulated. Private, big insurance companies are in the business of making money, not providing full healthcare, and when they undertake the latter, it is likely not to be in the best interests of patients or to be efficient. Administrative costs (and immense profiteering) are greater in the private healthcare insurance system, and even Medicare itself is weakened by having to work through the private system.
The USA is a country where health insurance for medical and mental healthcare is a function of socioeconomic status. Everyone knows that this inhumane system should have been corrected long ago. We must immediately end our moral crime of having the greatest health system in the world, but only for those who can afford it. We must support the common principles that healthcare is a human right, must be free from corporate profit, and must be achieved through national legislation.
Let’s never forget that universal Medicare for All is a solid investment in all citizens of our country by simply promoting a social service for universal access to affordable healthcare insurance for all. Aren’t we a society that cares enough to see that everyone receive the healthcare they need? That’s the basic purpose of Medicare for All. The history of our most successful national health insurance program, Medicare, provides one of the best arguments for expanding the program to cover everyone. It’s time to end inadequate and dangerous health insurance programs. Insist on real health insurance reform essential for individuals and families.
Contact your legislators asking them to oppose and end Medicare Advantage, DCE’s, and REACH plans . Most importantly, ask them to strongly support new legislation now filed in Congress, “The Medicare for All Act of 2023” House Bill (H.R. 3421) and Senate Bill (S. 1655) that would establish this badly needed reform.