I have posted many times that the financial windfall via subsidies for private insurers providing Medicare Advantage is a huge crock. My biggest criticism is that private insurance companies then take this subsidy and use it for significant marketing costs and tie it to their commercial customer base and strong-arm providers to accept fee schedules below medicare rates and getting enhanced profits from this arbitrage and government funded gimmick. With recent enrollee numbers exceeding 10 million in the medicare advantage world (about 25% of all medicare patients) the subsidy (not Medicare Advantage) would be eliminated under Obama’s health plan to the savings tune of about $177 billion over ten years.
While there is much in the current HB 3200 I find distasteful, eliminating excess payments to private insurance companies is not one of them. While I am not being against private companies administering medicare, it makes no sense to pay them at a cost higher than the government can do it themselves. It would be akin to paying your neighbor’s 12 year old more for cutting your grass than you would pay your own kid.
This $177 billion is both the centerpiece for assisting to pay for Obamacare as well as a current source of controversy. According to Obama, savings like medicare advantage and others not wholly identified would pay for approximately 2/3 of the reported 900 billion of the plan costs. As a general rule, when the government says that they will eliminate waste, I get downright suspicious and ask for evidence of their success in other areas. To put $423 billion into perspective-which is the amount to get to 2/3 when adding savings from medicare advantage, you would have to eliminate outpatient therapy completely for almost 106 years to get that projected savings (although I am sure that even with PT currently at 2.2% of the medicare budget, they will find a way for us to contribute our share).
The political controversy stems around David Axelrod’s “viral” email in which he states that “it’s a myth that health insurance reform would be financed by cutting medicare benefits” erstwhile President Obama is at town hall meetings about “eliminating waste” including Medicare Advantage. Karl Rove in an op-ed highlights this apparent disconnect by going into a rambling discourse on how eliminating the medicare advantage subsidy actually cuts benefits-something that makes absolutely no sense at all and actually his position is the real “myth”. If eliminating the subsidy causes enrollees to go back to government medicare, how is that a loss in benefits? In fact, you might call Medicare the “public” option for those above 65 who have the right to enroll in Medicare Advantage if they believe the quality of care, benefits, and value is better than medicare. If private insurance companies find the business profitable and it often is if they are successful at cherry picking the healthy seniors they will continue to play. Because privatization of medicare is a cyclical product in the last several years, many will exit and perhaps others will enter. Isn’t that the meaning of true competition?
Thoughts?
