Entitled to Know

by Barbara B. Kennelly, President/CEO

How wonderful it is to finally hear the truth about what’s really happening with the privatization of Medicare expressed so clearly and persuasively in the halls of Congress. Specifically I’m talking about the House Budget Committee hearing on Medicare Advantage plans held this morning. As I testified to Chairman John Spratt and the rest of the Budget committee members today, our 4 million members and supporters are committed to the preservation of Social Security and Medicare.


At a time when Americans are being told we “can’t afford” Medicare and Social Security it’s ridiculous to continue paying private insurers billions of dollars in subsidies equaling approximately $1,000 more a year for each beneficiary than traditional Medicare currently pays. These insurance industry subsidies will cost taxpayers $149 billion dollars over the next decade and cut two years from Medicare’s solvency. These subsidies must go.

Congressional Budget Office Director Peter Orszag and Mark Miller, the Executive Director of Medicare’s Payment Advisory Commission, offered compelling and indisputable evidence that the insurance industry has reaped the benefits of these massive subsidies yet there’s little evidence of the promised efficiencies and savings for beneficiaries. In fact, Medicare beneficiaries are paying $24 a year in higher Part B premiums just to fund excess payments to private plans.

Since the passage of the Medicare Modernization Act (MMA) of 2003, Medicare has been undergoing a transformation into a privatized program. This legislation is a weapon aimed at the heart of traditional Medicare. It was designed to accomplish the goal expressed by former Speaker Newt Gingrich – to lure seniors voluntarily out of Medicare so that it would eventually wither on the vine. The overpayments to Medicare Advantage plans the committee explored today are just one of the tools in the MMA to achieve this end.

I cannot overstate the damage these Medicare Advantage overpayments will cause to the traditional Medicare program if they are not eliminated. Ultimately, overpaying MA plans will shatter the risk pool that makes Medicare work. Medicare Advantage plans tend to attract healthier seniors because of their benefits. As more of these seniors are lured out of traditional Medicare, they leave behind the frailest and most vulnerable to pay higher and higher premiums. Also, as MA enrollments grow, so do taxpayer subsidies. Over time, this cycle will cause Medicare to become unaffordable – for both taxpayers and beneficiaries.

At a time when our nation is struggling with how to create affordable health care coverage for all Americans, it is simply incomprehensible to me why we would destroy the one affordable, universal health care system that already exists in Medicare.