Medicare’s anniversary is the right time to demand a level playing field with private plans

Medicare’s anniversary is the right time to demand a level playing field with private plans
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When President Lyndon B. Johnson signed Medicare into law 53 years ago, he promised seniors that illness would no longer “crush and destroy the savings that they have so carefully put away over a lifetime so that they might enjoy dignity in their later years.” During the ensuing decades, Medicare has fulfilled that promise — today providing some 60 million Americans with the very health security and dignity that President Johnson envisioned.

Medicare has been an extremely efficient deliverer of health care — with 2 percent in overhead compared to at least 17 percent for private insurance.  Yet, private insurers who wanted a share of the Medicare market believed that they could deliver the same coverage for less. Their first attempt in the late 90's, Medicare Plus Choice, fell flat.  It turns out they couldn't do what they promised. In 2003, the Medicare Modernization Act (MMA) signed into law by President George W. Bush created Medicare Advantage (MA).

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Instead of expecting these high-profit insurers to compete on a level playing field with traditional Medicare, the MMA offered generous subsidies to the tune of about 14 percent more per enrollee than traditional Medicare to entice insurance companies back into the Medicare market. The Affordable Care Act began reducing these subsidies in 2010. Today, about one-third of Medicare enrollees are in Medicare Advantage.

 

Under the Trump administration, the playing field between the two forms of Medicare is far from flat. In fact, the pro-private sector policies of the Centers for Medicare and Medicaid Services (CMS) under the leadership of director Seema Verma tilt decisively toward private Medicare Advantage plans — to the detriment of traditional Medicare.

In the fall of 2017, CMS rolled out an outreach and enrollment toolkit that did not even mention traditional Medicare as an option for new enrollees. Instead, the toolkit urged agencies who counsel beneficiaries to “support a competitive marketplace of privatized health plans by encouraging competition.” A draft 2018 Medicare handbook was plagued by the same bias.

In February, 15 U.S. Senators sent a letter to CMS expressing concern over a fall 2017 Request for Information (RFI) regarding a “new direction” for Medicare’s Innovation Center, containing ambiguous language that suggested a shift toward privatizing Medicare.

During the course of 2018, CMS has rolled out a series of shiny, new benefits for Medicare Advantage plans to offer enrollees largely at the urging of the big insurance companies hoping to capture more market share. These new benefits include free gym memberships, Uber transportation to doctor’s offices, low-cost hearing aids, a mobile dental clinic and a “grocery on wheels” — that are not available to traditional Medicare beneficiaries.

While Medicare Advantage plans can now offer these new benefits, the majority in Congress has refused to expand traditional Medicare to cover much-needed expenses like dental, hearing, and vision care. Legislation introduced by Congressional Democrats to enact these changes has languished under Republican control. The Trump administration has refused to put any muscle behind such expansions for the 41 million Americans in traditional Medicare.

The administration’s apparent bias toward Medicare Advantage is not merely a Washington insiders’ issue. It directly impacts the health care of seniors. Part of the problem is that Medicare Advantage attracts younger and healthier enrollees, leaving older and sicker patients in traditional Medicare.

If left unchecked, this trend will drive up the costs of traditional Medicare and further strain the system’s finances. Indeed, the new “goodies” that Medicare Advantage can now offer tend to intensify this disparity — as they are more enticing to younger seniors and less important for older ones.

Meanwhile, CMS has failed to highlight some of the disadvantages of Medicare Advantage. Unlike traditional Medicare, beneficiaries are limited to a fixed network of doctors and other providers. That may not matter as much for younger and healthier seniors. But as these patients age and develop acute or chronic conditions, they may not be able to access preferred doctors and specialists.

If those older subscribers try to switch from Medicare Advantage to traditional Medicare, they may be unable to obtain adequate supplemental insurance (known as “Medigap” coverage), which has limited guaranteed issue periods. Patients with pre-existing conditions who want to move from Medicare Advantage to the traditional program may have an even harder time obtaining a Medigap policy.

This is not to say that Medicare Advantage isn’t a reasonable choice for some seniors. But enrollees searching for their best personal options — not just for now, but for the long-term — deserve accurate, unbiased information from their government. The Trump administration should not be putting its thumb on the scale in favor of private plans at the expense of traditional Medicare.

The president and his allies in Congress also shouldn’t propose budgets that cut $500 billion from the program, as their 2019 spending proposals most certainly do. At this year-and-a-half mark of the Trump presidency and 53rd anniversary of Medicare, the administration’s stewardship of this program does not live up to the promise of President Johnson’s words or the cherished program that he signed into law.

Max Richtman is president and CEO of the National Committee to Preserve Social Security and Medicare, a membership organization which promotes the financial security, health and well-being of current and future generations of maturing Americans.