By Julian Pecquet - 06/01/10 11:01 PM EDT
Democratic lawmakers are touting a new report to argue that healthcare reform will protect Medicare beneficiaries from unscrupulous insurers.
A new Government Accountability Office (GAO) report finds that some Medicare Advantage plans may have bilked seniors by attracting healthy enrollees into low-premium plans and then hitting them with high and unexpected out-of-pocket costs — something health reform will prevent, Democrats say.
Most Americans still dislike the health reform law, polling suggests, including many seniors who worry that they’ll be worse off as a result.
The 11 million seniors enrolled in Medicare Advantage, which lets seniors get all their Medicare benefits from private plans, have been among the most vocal critics of health reform. About 24 percent of the Medicare population is enrolled in Medicare Advantage.
“This report shows that left to their own devices, insurance companies will design plans that benefit their profit margins above all else,” Ways and Means Health subcommittee Chairman Pete Stark (D-Calif.) said in a statement.
“Unfortunately, these discriminatory plans leave many seniors with unexpected out-of-pocket costs, much higher than they would have had if they had been in traditional Medicare. As [the Centers for Medicare and Medicaid Services] implements Medicare Advantage reforms, they need to hold insurance companies accountable so they can’t stick seniors with the bill for their profit maximizing schemes.”
According to the GAO report, seniors in the low-premium plans paid:
• About $100 more for a typical inpatient hospital stay than those in plans for beneficiaries in poorer health;
• About $150 more for a typical inpatient mental health stay;
• About $500 more for a typical stay in a skilled nursing facility, such as a nursing home;
• Over $300 more for a year of renal dialysis.
The insurance industry responded that the GAO report also shows that Medicare Advantage plans have saved seniors money compared to traditional Medicare.
“The vast majority of seniors have expressed very high satisfaction with their Medicare Advantage coverage,” Robert Zirkelbach, spokesman for America’s Health Insurance Plans, said in a statement. “Recent reports have found that seniors in Medicare Advantage spend fewer days in a hospital, are subject to fewer hospital re-admissions and are less likely to have ‘potentially avoidable’ admissions, for common conditions ranging from uncontrolled diabetes to dehydration, compared to fee-for-service Medicare.”
Zirkelbach highlighted the fact that seniors paid $823 in cost-sharing under Medicare Advantage for the average 10-day inpatient hospital stay, versus $1,068 under traditional Medicare.
Traditional Medicare also imposes higher costs for primary care visits, he said.
The GAO report, which examined 2008 data, was requested by Ways and Means and Energy and Commerce committee leaders. It comes as Democrats struggle to explain how health reform can claim to preserve Medicare’s solvency without hurting seniors when the law slashes government payments to the Medicare Advantage program by more than $130 billion over 10 years, starting next year.
Health reform critics have jumped on statements by the chief actuary for the Medicare agency, who in an April 22 report estimated that by 2017 enrollment in Medicare Advantage plans will be about half what it would have been without health reform — 7.4 million enrollees versus 14.8 million. And those beneficiaries still enrolled will see fewer benefits.
“The new provisions,” Rick Foster, the chief actuary, wrote, “will generally reduce Medicare Advantage rebates to plans and thereby result in less generous benefit packages.”
The Obama administration has stepped cautiously into the controversy. The Department of Health and Human Services last week unveiled a four-page brochure aimed at seniors that touts health reform’s benefits while seeking to soothe fears about Medicare Advantage cuts.
“If you are in a Medicare Advantage plan,” the carefully worded brochure promises, “you will still receive guaranteed Medicare benefits.”
The administration had already begun to overhaul the Medicare Advantage program even before health reform became law, the GAO report says, by holding Medicare Advantage plans accountable for meeting minimum cost-sharing requirements. But health reform goes further, a statement from congressional Democrats says, by limiting the ability of plans to charge higher cost-sharing for services most likely to be used by sick enrollees — such as nursing home care, dialysis and chemotherapy. Health reform also gives the Medicare agency more authority to establish similar cost-sharing thresholds for all other Medicare-covered services.
Democrats have long criticized what they see as a taxpayer-funded giveaway to private insurers, but the program is popular with its beneficiaries in part because it offers them “goodies” — such as free eyeglasses and gym memberships — that regular Medicare recipients don’t get.
The new law seeks to reduce what Democrats call “overpayments” to private plans by gradually bringing their payments closer to traditional Medicare costs. Private plans would be rewarded with more money if they achieve high quality ratings.