Entitled to Know

Unlike many of us, Humana, a private Medicare Advantage insurer, doesn't have the post-holiday blues.

According to the Associated Press , one Wall Street analyst has upgraded shares of health insurer Humana Inc. today saying it will be at least three years until Congress can make any cuts in Medicare Advantage programs. Carl McDonald with CIBC World Markets predicts:

"There will be no Medicare Advantage cuts in 2009, and unless cutting Medicare is the first priority of the new administration, it will be difficult to enact any cuts in 2010, either," he said. "This will give Humana and the Medicare industry three more years of strong enrollment and earnings growth."

Ultimately, this is what last month’s Congressional Medicare debate really was about...protecting the private “Medicare industry’s” profits. But at what price? Seniors will continue to help foot the bill for massive Medicare subsidies to these private insurance companies, while companies like Humana report record annual profits.

MedPAC has estimated that every Medicare beneficiary pays $24 a year in higher Part B premiums just to fund these excess payments to private plans. Because subsidies are projected to continue rising, all Medicare beneficiaries can expect to pay dramatically higher premiums in the future, and can expect increasing portions of those premiums to be diverted to private plan subsidies.

According to CBO, paying private plans at the same rate as traditional Medicare would save $54 billion over the next five years and $149 billion over the next ten years. Not only would eliminating these large overpayments save billions of dollars, it would also add two years of solvency to Medicare's hospital insurance trust fund.

While Wall Street investors may be giddy with predictions of the status quo in Medicare Advantage, seniors and taxpayers aren’t likely to quietly or happily continue to foot this bill for three more years.