Categorized | Health, Pushback, Your Money

On Medicare’s Birthday, Who’s Eating All The Cake?

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Medicare celebrated its 58th birthday on July 30. President Johnson shown signing the Medicare program into law. Pictured to the right of the president are Lady Bird Johnson, former president Harry Truman, Vice-President Hubert Humphrey and Bess Truman. Photo courtesy of LBJ Presidential Library.

By Al Norman

Medicare and Medicaid celebrated their 58th birthday on July 30. But instead of celebrating with cake and ice cream, some health care groups were organizing parties to “reclaim Medicare from corporate greed.”

The story of this battle over the future of Medicare goes back to Original Medicare, which was signed into law by President Lyndon Johnson in 1965. The Original version of Medicare had a Part A (Hospital Insurance) and a Part B (Medical Insurance). But over the years, Congress made dramatic changes in what Medicare covers, and who really controls what started off as a government program.

Seven years after it was created, Medicare expanded to cover the disabled, people with end stage renal disease, and people 65 or older that selected Medicare coverage.

In 1997, the Balanced Budget Act created private “Medicare Choice” insurance companies. Six years later, the Medicare Prescription Drug Improvement and Modernization Act (MMA) made the biggest changes to Medicare. An optional prescription drug benefit, “Part D,” began covering medications. But even more radical, private health plans, the Medicare Choice plans, were expanded into “Medicare Advantage” Plans in 2006 — the largest privatization shift since Medicare was created 41 years earlier.

The Advantage plans were authorized to offer Medicare benefits as an alternative to Original Medicare. They were called Medicare “Part C” Plans. Some of the most vocal critics of Medicare as “socialized medicine” finally achieved a major victory by wresting away from the federal government much of the funding and decision-making about Medicare health care over to private corporations.

By 2022,  more than 28.4 million Medicare members were enrolled in Advantage plans — roughly 48 percent of the eligible Medicare population. Fifty-five percent of total Medicare spending ($427 billion) was going to these private plans. The share of Medicare beneficiaries  enrolled in Advantage plans more than doubled since they were created. In 2007, only 2 in 10 Medicare enrollees were in Advantage. The Congressional Budget Office projects that by the year 2032, 61. percent of Medicare beneficiaries will be in Advantage plans.

But as enrollment numbers rose, so did the problems associated with these plans. Six months ago, the Kaiser Health Network released 90 “secret government audits” that revealed millions of dollars in overpayments to Medicare Advantage health plans. The audits, which cover billings from 2011 through 2013, are the most recent done. The federal government may be ordering Advantage plans to pay back hundreds of millions of dollars in overcharges to the U.S. Treasury. One analyst estimates the overpayments could reach as high as $3 billion.

According to a New York Times article in October of 2022, a former top government official suggested overpayments to Advantage plans were more than $25 billion. “Eight of the ten biggest Medicare Advantage plans — representing more than two-thirds of the market — have submitted inflated bills.”

The Times wrote, “Four of the five largest players … have faced federal lawsuits alleging that efforts to over-diagnose their customers crossed the line into fraud. The companies were accused by the Justice Department of producing ‘diagnoses of serious diseases that might have never existed.’”

An advocacy group called (HCN), based in Boston, which supports a Single Payer health care system, warned consumers on Medicare’s birthday: “We know that unless we reclaim Medicare from corporate greed, we may lose it forever.”  HCN wrote, “Medicare is being taken over by HUGE health insurance companies, like United Health Care, Humana, and Aetna, who are using the Medicare Advantage program to line their own pockets at the expense of the lives of folks who rely on these plans for their health care. These companies have also figured out how to game us taxpayers and are overpaid each year by BILLIONS. Medicare is about providing health care to people who need it. Period. It was never meant to be a get rich quick scheme.”

HCN held Medicare Birthday Parties on July 30 to call on President Joe Biden “to reclaim Medicare from greedy corporations.”

HCN members reported the following common problems with Advantage plans:

Limited networks of providers, and limited prescription drugs covered

High co-pays, deductibles, and fees  leading to sometimes catastrophic out-of-pocket costs

Pre-authorization denials and denials of claims for care received,

Upcoding, assigning more severe diagnoses in an attempt to overbill Medicare

Delays and bureaucracy in approving coverage, for those suffering from painful or life-limiting conditions.

“While Medicare Advantage worked for some,” HCN concludes, “the majority of our respondents had negative experiences with their Medicare Advantage plans. Overall, they reported that although their premiums may have been lower, the drawbacks were significant — often leading to higher costs and sometimes to health crises.”

It may be Medicare’s birthday, but many health care advocates are concerned that private insurance Advantage plans are eating all the cake.

Al Norman worked in elder home care services in Massachusetts for more than three decades. He has been writing opinion pieces in the 50+ Life for almost as long.

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