Entitled to Know

There has been a lot of activity in the SCHIP/Medicare debate in the House last week and today in the full Senate. Kaiser Daily Health Report has a nice editorial roundup of the debate.

But we’ve also seen a number of blog discussions in which it’s clear even those who are paying attention to this debate are still confused about the players. So, here it is in a nutshell.

Virtually every major health and senior’s advocacy group (NCPSSM, AMA, Medicare Rights Center, AARP, Families USA, etc.) supports the House SCHIP/Medicare act called the Children’s Health and Medicare Protection Act or “CHAMP”.These organizations are supporting cuts in industry subsidies…not cuts to seniors. For advocates committed to senior and health issues this is a no-brainer. Here is the AMA/AARP ad.

The only "seniors group" fighting against CHAMP is an organization created by the insurance industry. Here’s their ad.

So, it’s easy to see how people are confused. But CHAMP does not take away seniors’ Medicare. It does require Medicare Advantage private insurers to be paid at the same rate as traditional Medicare, ending the industry gravy train, which has meant hefty profits to insurance companies collecting billions in taxpayer supported subsidies at the same time.

The New York Times’ Paul Krugman, sums up the debate this way:

“The House plan, which would cover more children, is more expensive, but it offsets Schip costs by reducing subsidies to Medicare Advantage -- a privatization scheme that pays insurance companies to provide coverage, and costs taxpayers 12 percent more per beneficiary than traditional Medicare. Strange to say, however, the administration, although determined to prevent any expansion of children's health care, is also dead set against any cut in Medicare Advantage payments. So what kind of philosophy says that it's O.K. to subsidize insurance companies, but not to provide health care to children?”

Industry subsidies or children’s healthcare…it should be an easy choice.

Two key House Committees are debating important "CHAMP" legislation which reauthorizes and improves the State Children’s Health Insurance program while also making desperately needed reforms to the Medicare Modernization Act of 2003, including the elimination of Medicare Advantage subsidies to private insurers.

This is very important legislation for seniors and children alike. You can watch the House Energy and Commerce Committtee hearing mark-up of this bill live at 11:30am and the House Ways & Means Committee at 1:00pm.

The House Ways & Means Committee has also created two wonderful "Truth Squad" reports which provide the facts about this legislation which you won't hear from tobacco companies afraid a tax might limit their sales and insurers worried about losing billions in subsidies. Here's the Tobacco Tax Truth Report and the Rural Care Truth Report on what this legislation really means for rural beneficiaries currently being targeted by an industry scare campaign which is threatening a loss of healthcare in rural America.

This is a critical debate for the future of healthcare of young and old alike. If Congress can't manage to do the right thing for seniors and children...one can't help but wonder how urgent system-wide reform will be possible.

Tomorrow the House Energy and Commerce Committee will consider legislation that would reauthorize and expand SCHIP and make revisions to Medicare. The House Ways and Means Committee is expected to take up the legislation on Thursday.

While the Senate SCHIP bill does not include Medicare provisions, Congress Daily reports that the House bill would increase SCHIP funding by $50 billion over five years while also tackling many of the Medicare reforms sought by healthcare and seniors’ advocates, including the National Committee. Congress daily reports:

“The bill would also: reverse a scheduled cut in Medicare payments to physicians and provide a modest increase in fees for each of the next two years,abolish a provision of the 2003 Medicare law that mandates the president propose changes in Medicare to limit the program's reliance on general revenue, give state insurance commissioners more power to regulate the marketing of private MA plans by agents and brokers, reduce payments to private MA plans, which are estimated to be 12% higher than payments to the traditional program for equivalent benefits, increase reimbursement rates for rural health providers in 2008 and provide larger subsidies to lower-income beneficiaries.”

Kaiser Daily Health Report provides a good roundup of the latest SCHIP/Medicare coverage today.

The Senate and House leadership say they want to pass SCHIP legislation before the August recess.

Thanks to the Center for Budget and Policy Priorities for "Informing the Debate About Curbing Medicare Advantage Overpayments".

Not only are insurers receiving billions in government subsidies to operate private Medicare plans but new profit numbers out this week show business is very good if you’re an insurance company with a piece of the Medicare privatization pie.

“UnitedHealth Group Inc., the largest U.S. health insurer, said profit rose 22 percent on gains from government-sponsored medical programs.”… United Health Profit Rises on Government Medical Plans , Bloomberg 7/19/07

“Health insurer Humana Inc. on Wednesday reported higher-than-expected second-quarter profit, mainly because of improving cost trends, and its shares rose as much as 10.4 percent to a record high. The company,one of the largest providers of Medicare health plans for the elderly, also rasied its full-year earnings forecast, which easily topped Wall Street's forecasts.” … Humana Profit Beats Outlook, Reuters, 07/18/07

Remember that while private insurers collect these record high profits the government is also paying them $1,000 on average more per beneficiary to provide health care coverage already provided by traditional Medicare. And, a married couple on Medicare is now paying $48 more in annual premiums to help cover billions in overpayments to insurers. These overpayments have cut two years from Medicare’s solvency according to the independent Medicare Payment Advisory Commission (MedPAC). MedPAC also estimates that in the case of Private Fee-for-Service plans only half of the excess payments to insurers are being used for extra benefits to seniors. It’s easy to see where the rest may be going…

“Humana has now raised its full-year forecast twice in the past two
months. However, the company's bullish outlook may not play well with U.S.lawmakers as they weigh whether Medicare Advantage reimbursements are too rich,CIBC's McDonald said. ‘If Congress is arguing already that they overpay you, and then you come out and you beat numbers and raise guidance on better Medicare margins, you wonder if that just gives Congress more ammunition to cut rates,’ McDonald said.”…Reuters

We can only hope.

We've been talking and writing and writing and talking about the privatization of Medicare. While a lot of our outreach has been with our National Committee members, seniors nationwide and grassroots work, today we went straight to Congressional staff. Today's briefing focused on those policy influencers who need to understand what Medicare Advantage overpayments are all about and their effect on the Medicare program. Three of the nation’s leading healthcare advocacy organizations were joined by Health Subcommittee Chairman Rep. Frank Pallone (D-NJ) who stated:

“The over-payments made to Medicare Advantage are a gaping hole that is draining the Medicare trust fund and imposing unfair costs on millions of beneficiaries across the nation. The time has come for Congress to put an end to end these subsidies to ensure that Medicare remains a reliable source of health care for the elderly and disabled for many years to come."

Thousands of letters from National Committee members calling on Congress to pass legislation, which would repeal billions in insurance industry overpayments, are being sorted for delivery to Capitol Hill later this month. The President of the National Committee and former Congresswoman, Barbara Kennelly told the audience:

“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. The vast majority of Medicare beneficiaries remain in the traditional program. But their voices are not as loud as the insurance industry’s”.

According to the Congressional Budget Office, private insurers offering Medicare Advantage plans will collect $75 billion dollars this year alone and $1.31 trillion over the next decade. That’s funding which could have gone to Medicare but is now going to the insurance industry instead. Judith Stein, Executive Director, Center for Medicare Advocacy, Inc. says:

“Medicare wasn't broken. But because of the ever-increasing private Medicare options, it is. The solution for the Medicare crisis is not to increase the eligibility age or decrease benefits, but to stop privatizing the program at the expense of older people and taxpayers."

Rev. Sandra Butler-Truesdale, President of the Campbell Heights Resident’s Association, described how D.C. seniors became victims of a private insurer’s marketing pitch that puts sales ahead of seniors’ care. Campbell Heights seniors were promised the private plan wouldn’t replace Medicare, there were no co-pays and they could stay with their own doctors. None of that is true.

“We are now in limbo, waiting 45 days to be placed back in Medicare.What do we do if we need care within those 45 days? Most hospitals are in trouble financially and don’t want to admit patients without medical insurance. What do we do?”

Richard Deem, Senior Vice President of Advocacy with the American Medical Association says

“Congress can stop Medicare cuts to doctors and preserve seniors’ access to care by eliminating overpayments to private health insurers providing Medicare Advantage plans. These subsidies are making Medicare less sustainable as the baby-boom generation reaches Medicare eligibility”

If Medicare continues to fund large subsidies to private plans, the program will face even more pressure to cut benefits and increase out-of-pocket costs for beneficiaries. Traditional Medicare will be eroded while private plans continue to collect billions in subsidies and beneficiaries pay more of the high costs of healthcare.

It’s time to stop disadvantaging Medicare. End these costly subsidies to insurance companies and put that money to work for all of the 43 million Americans enrolled in Medicare not just the few enrolled in private plans.

Breaking down President’s Bush words is always a mind-boggling task, in fact some would argue it could probably be a job unto itself. For that reason, we don’t usually go there.

This time however, the President’s view on healthcare reform...delivered before a friendly audience of Cleveland business leaders (the meeting wasn't open to the public) this week...can’t be ignored. You can read the full White House transcript but here's one key quote. He said:

“The immediate goal is to make sure there are more people on private insurance plans. I mean, people have access to health care in America. After all, you just go to an emergency room.”

There you have it folks. Forget skyrocketing health care costs, forget the millions who can’t afford insurance, forget the fact that this administration is unprepared and unwilling to make the investments necessary to prepare for an aging nation. After all, we have emergency rooms, right?

We highly recommend you watch the whole speech to appreciate the President’s single-minded “business-good, government-bad” approach to health care reform.

by Barbara B. Kennelly, NCPSSM President/CEO

Imagine starting a business with a guaranteed 12 percent to 50 percent federal subsidy not available to your competition. The cost of that subsidy is then passed on to your competitor's customers. And finally, let's add restrictions to your competitors that don't apply to your new business. Sounds like a sweetheart deal, right? It is. It's called Medicare Advantage, the privatized Medicare plan created by the insurance industry, passed by Congress in the Medicare Modernization Act of 2003 and now enrolling millions of seniors nationwide.

Private insurers offering Medicare Advantage plans will collect $75 billion this year alone and $1.31 trillion over the next decade, according to the Congressional Budget Office. That's federal funding which could have gone to Medicare but is now going to the insurance industry instead. These private plans are paid $1,000 more a year for each beneficiary than the government pays for seniors enrolled in traditional Medicare. The independent Medicare Payment Advisory Commission estimates that every Medicare beneficiary is paying $24 more per year for their Part B premiums just to subsidize these private plans. So, even though 81 percent of Medicare's beneficiaries have chosen to remain in traditional Medicare, they are now paying extra premiums to cover the 19 percent who've chosen the private plans. These billions of dollars in overpayments have also cut two years from Medicare's solvency.

Insurers and privatization supporters in Washington defend Medicare Advantage plans claiming better service at a lower cost. The overpayment price tag certainly casts doubt on the cost argument. And, as we saw with the Part D prescription drug benefit, there are mixed results with the quality of service. MedPAC reports that in the case of private fee-for-service plans, only half of the excess payments to insurers are being used for extra benefits to seniors. The other half goes directly to insurance companies' bottom lines. And even though private plans are required to cover everything Medicare covers, they often impose higher cost-sharing requirements than traditional Medicare for benefits such as hospitalization, home health care and skilled nursing care. This means more out-of-pocket costs for seniors, many of whom don't even realize it until faced with a serious health crisis.

Congress is now reconsidering the future of these massive subsidies. Not surprisingly, the insurance industry lobby is geared up and launching its full assault to protect the spoils it won with the passage of MMA 2003. The industry's political case was slowed somewhat with recent news reports that seniors from coast to coast have been defrauded by Medicare Advantage salesmen luring them out of traditional Medicare into private plans their own doctors wouldn't accept or the seniors couldn't afford.

A recent survey of state insurance agencies found 39 of 43 states had received complaints about Medicare Advantage misrepresentations. While the industry claims the complaints are from "a few bad eggs" it promises to crack down on; in fact, the marketing abuses are inevitable in a system designed to reward enrollment numbers. And in an effort to persuade Democrats in Congress, the insurance lobby now claims low-income and minority seniors will suffer if these overpayments are stopped. Conveniently, their data ignore the large number of these beneficiaries currently receiving Medicaid.

A recent analysis by the economists at the Center on Budget and Policy Priorities found that low-income and minority beneficiaries are far more likely to receive coverage through Medicaid than Medicare Advantage plans. In fact, only 14 percent of Asian Americans, 13 percent of African Americans, and 25 percent of Hispanics are enrolled in private plans. The lifeline for Medicare Advantage is the insurance lobby and the billions of dollars it has convinced Congress to pump into industry coffers at the expense of seniors. Insurers have threatened to cut their Medicare Advantage plans if Congress halts the flow of excess payments. However, if Medicare continues to fund large subsidies to private plans, the program will face even more pressure to cut benefits and increase out-of-pocket costs for beneficiaries. Traditional Medicare will be eroded while private plans continue to collect billions in subsidies and beneficiaries pay more of the high costs of healthcare.

Advantage ... insurers.

It's time to stop disadvantaging Medicare. End these costly subsidies to insurance companies and put that money to work for all of the 43 million Americans enrolled in Medicare not just the few enrolled in private plans.


This OpEd can also be seen in the July 10th Hartfort Courant.

As the years pass and healthcare costs continue to skyrocket unchecked, it’s become clear we can’t fulfill our goal of preserving Medicare without system wide healthcare reform. So, that brings us to the universal healthcare debate. The Bush administration opposes this idea because, as we’ve seen with the privatization of Medicare and the on-going attempts to privatize Social Security, this administration’s basic philosophy can be summed up this way: Government oversight…bad. Private industry control…good. Economist Dean Baker says:

"The debate is silly, because the level of government involvement is not the issue. The real issue is the extent to which the health care industry – the insurance companies, the drug companies, and the medical equipment companies – will be allowed to rip off the public.

The government does not have to dictate anything. It can just give people a choice that they don’t currently have: specifically the option for every individual and employer to buy into a government-run Medicare type plan. Such a plan would likely offer care at a considerably lower cost than private insurers since it won’t have to pay high CEO salaries, marketing expenses, and dividends to shareholders. That is why the traditional Medicare program always wipes the floor when it competes on a level playing field with private insurers. (This is also the reason the private insurers insist on large subsidies from Medicare – they can’t compete.)"

Dean goes on to talk about the privatization of Medicare, Part D and industry subsidies which are speeding Medicare’s insolvency while pouring billions into insurers coffers. His full post is on TPM Cafe and is a must-read for anyone interested in healthcare reform, Medicare and the price we’re all paying for this administration’s privatization policies.