Robert's Stochastic thoughts

Monday, May 07, 2007

Robert Pear in the NYT 7/5/07
Robert Waldmann here 20/12/06

via Kevin Drum

Now with the passage of time the disadvantages of "Medicare advantage" accounts have grown. Currently about one fifth of Medicare recipients use private management, about 4% use fee for service plans and the cost per patient of private fee for service plans is 19% higher (from the NY Times article). In 2004 the Medicare budget was 300 billion making the advantage disadvantage of just the worst of the worst (private fee for service) over $ 2,400,000,000. The estimated cost of medicare for FY 2006 is $ 396,347,000,000 making the advantage disadvantage just from fee for service plans roughly $3,000,000,000.

Ouch.

Of course the big bucks are wasted on private non fee for service plans which are much more common.

Also recipients complain.

11 comments:

Anonymous said...: We have a plot against Medicare, and a plot against older Americans, and save for all to few astonishingly little understanding of what is happening broadly and less concerted action to undo the plot.

anne; 1:30 PM
Anonymous said...: We have evidently lost AARP as an advocate for Medicare and universal health care insurance, since AARP has decided to become a prime private health care insurer.

We have lost even the NAACP and League of United Latin American Citizens as advocated for public Medicare.

anne; 1:34 PM
Anonymous said...: http://economistsview.typepad.com/economistsview/2007/04/paul_krugman_th.html

April 20, 2007

Paul Krugman: The Plot Against Medicare
Edited by Mark Thoma

Paul Krugman says the plot against Medicare is moving forward, aided and abetted by some surprising allies:

NY Times: The plot against Social Security failed: President Bush's attempt to privatize the system crashed and burned when the public realized what he was up to. But the plot against Medicare is faring better: the stealth privatization embedded in the Medicare Modernization Act, which Congress literally passed in the dead of night back in 2003, is proceeding apace.

Worse yet, the forces behind privatization not only continue to have the G.O.P. in their pocket, but they have also been finding useful idiots within the newly powerful Democratic coalition. ... There's no nice way to say it: the NAACP and the League of United Latin American Citizens have become patsies for the insurance industry.

To appreciate what's going on, you need to know what has been happening to Medicare... The 2003 Medicare legislation created Part D, the drug benefit for seniors... Medicare, Part D isn't provided directly by the government..., you can get it only through a private ... insurance company. At the same time, the bill sharply increased payments to Medicare Advantage plans, which also funnel Medicare funds through insurance companies.

As a result, Medicare — originally a system in which the government paid people's medical bills — is becoming, instead, a system in which the government pays the insurance industry to provide coverage. And a lot of the money never makes it to the people Medicare is supposed to help.

In the case of the drug benefit, the private drug plans add an extra, costly layer of bureaucracy. Worse..., they have much less ability to bargain for lower drug prices than government programs like Medicaid and the Veterans Health Administration. ...

Meanwhile, those Medicare Advantage plans cost taxpayers 12 percent more per recipient than standard Medicare. In the next five years that subsidy will cost more than ... it would cost to provide all children ... with health insurance. ...

With the Democratic victory..., you might have expected these things to change. But the political news over the last few days has been grim.

First, the Senate failed to end debate on a bill — in effect, killing it — that would have allowed Medicare to negotiate over drug prices. ...[I]n spite of overwhelming public support..., 42 senators, all Republicans, voted no...

If we can't even establish the principle of negotiation, a true repair of the damage done in 2003 ... seems politically far out of reach.

At the same time, attempts to rein in those Medicare Advantage payments seem to be running aground. Everyone knew that reducing payments would be politically tough. What comes as a bitter surprise is the fact that minority advocacy groups are now part of the problem, with both the NAACP and the League of United Latin American Citizens sending letters to Congressional leaders opposing plans to scale back the subsidy....

anne; 1:35 PM
Anonymous said...: http://www.nytimes.com/2007/04/21/opinion/21sat1.html?ex=1334808000&en=e9fa0ff2aaeacec6&ei=5090&partner=rssuserland&emc=rss

April 21, 2007

The Medicare Privatization Scam

If private health plans are supposedly so great at delivering high-quality care while holding down costs, why does the government have to keep subsidizing them so lavishly to participate in the Medicare program?

About a fifth of elderly Americans now belong to private Medicare Advantage plans, which — thanks to government subsidies — often charge less or offer more than traditional Medicare. As Congress struggles to find savings that could offset the costs of other important health programs, it should take a long and hard look at those subsidies.

The authoritative Medicare Payment Advisory Commission estimates that the government pays private plans 12 percent more, on average, than the same services would cost in the traditional Medicare fee-for-service program. The private plans use some of this money to make themselves more attractive to beneficiaries — by reducing premiums or adding benefits not covered by basic Medicare — and siphon off the rest to add to profits and help cover the plans' high administrative costs....

anne; 1:38 PM
Anonymous said...: http://www.nytimes.com/2007/05/01/opinion/l01krugman.html

Medicare Advantage

To the Editor:

We take offense at Paul Krugman’s column, “The Plot Against Medicare.” Not only was the column insulting, but it also ignored our goals to ensure adequate, affordable health care for the communities we represent.

Many African-American and Latino seniors prefer Medicare Advantage plans to traditional Medicare. Of those low-income seniors who make just enough to be ineligible for Medicaid but who lack access to employer-sponsored supplemental coverage, 54 percent of Latinos and 38 percent of African-Americans choose Medicare Advantage.

We are strong supporters of Medicare and have consistently fought for full financing. We reject the notion that additional benefits and options provided by Medicare Advantage should be scrapped so that the funds can be used elsewhere.

This is an immoral dichotomy; not only do we advocate for continued funding of Medicare, Medicare Savings Programs and Medicare Advantage, but we also advocate passionately for universal quality health care.

We will continue to support all programs that benefit our communities.

Hilary O. Shelton
Brent Wilkes
Washington, April 26, 2007
The writers are, respectively, director of the N.A.A.C.P. Washington bureau; and national executive director for the League of the United Latin American Citizens.

anne; 1:39 PM
Anonymous said...: http://www.cbpp.org/4-3-07health.htm

April 3, 2007

Low-Income and Minority Beneficiaries Do Not Rely Disproportionately on Medicare Advantages Plans: Industry Campaign to Protect Billions in Overpayments Rests on Distortions
By Edwin Park and Robert Greenstein

Findings

Private "Medicare Advantage" health plans were brought into Medicare to reduce costs, but Medicare pays them 12 percent more than the cost of treating comparable beneficiaries through traditional Medicare, adding billions to Medicare's costs.

Private plans argue that curbing the overpayments would harm low-income and minority Medicare beneficiaries, who they claim rely disproportionately on Medicare Advantage for supplemental coverage. This claim, however, is based on misleading use of data.

Medicaid, not Medicare Advantage, is the main form of supplemental coverage for low-income and minority Medicare beneficiaries. The most cost-effective way to help these individuals would be to strengthen the programs within Medicaid on which many of them rely to supplement Medicare coverage and to pay the Medicare premiums for them.

Moreover, the overpayments are harming millions of minority beneficiaries by raising their monthly Medicare premiums. The overpayments also are weakening Medicare's finances and ballooning its costs, thereby building pressure for sizable Medicare cuts in the future.

Curbing overpayments to Medicare Advantage plans would benefit Medicare beneficiaries by reducing costs and premiums and improving Medicare's long-term fiscal sustainability....

anne; 1:40 PM
Anonymous said...: This is so discouraging, so discouraging. We have an Administration that has worked feverishly to undermine any support for programs that can best be governmental or if privatized can be strictly monitored for integrity.

So, we esperience Republicanism.

anne; 1:43 PM
Anonymous said...: So that we understand the tragedy that we have encompassed in policy. Not only are Republicans intent on doing harm to Medicare and Medicaid, the $564 billion already budgetted directly for the insanity of Iraq makes a mockery of the $54 billion we could save ojn Medicare over the coming 5 years by ending the absurd harmful subsidies to private Medicare insurers.

Where are the hosts of economists who even begin to care about what Paul Krugman has sought to show us?

anne; 2:43 PM
Anonymous said...: Paul Krugman always sets down sources for his columns within a day of the writing, a remarkably valuable resource and rather unique for columnists. However, Krugman is relentlessly bullied which is certainly becuase he is so methodical and incisive and precise in writing as to constantly worry those who would have it otherwise.

No matter the typical and expected complaints of Hilary Shelton and Brent Wilkes, Krugman is right about the "disadvantage to Medicare recipients, minority or otherwise, of subsidies to private insurers. But, the complaints show the difficulty in generating rational health care policy.

anne; 2:45 PM
Anonymous said...: So, then we are paying private insurance companies $54 billion is subsidies to harm Medicare recipients, especially lower income or minority recipients, while recruiting low income and minority recipients and supposed representatives for the same harmful subsidies.

anne; 2:53 PM
Anonymous said...: http://www.nytimes.com/2007/05/08/opinion/08tue1.html?hp

May 8, 2007

Medicare Privatization Abuses

It seems that outrageously high government subsidies aren't enough to satisfy the private plans that participate in Medicare. Some of these Medicare Advantage plans have been caught using hard-sell tactics to pressure elderly Americans into signing up for policies that may leave them worse off than they would be with traditional Medicare coverage. The unscrupulous sales pressure is one more argument for removing the subsidies that are the only crutch allowing many of these plans to survive.

The abusive sales tactics are particularly egregious among the private fee-for-service plans. These plans receive the highest subsidies and do the least to earn them among the array of private offerings available for Medicare recipients. Yet these plans are the fastest-growing type of private Medicare coverage, thanks to subsidies that average 19 percent above the cost of traditional Medicare and to aggressive marketing.

As Robert Pear reported in The Times yesterday, state officials are investigating a range of sales abuses. In Georgia, two insurance agents were arrested and accused of signing up unwilling consumers; one beneficiary said her signature was forged by a door-to-door salesman. In North Carolina, the insurance commissioner is investigating complaints that agents switched residents of an assisted-living facility from traditional Medicare into private plans without their permission. At least five other states are investigating complaints about sales tactics.

Defenders of the private fee-for-service plans argue that they often provide better benefits or charge beneficiaries less than traditional Medicare does, a feat they are able to accomplish thanks to their huge subsidies. That is often true, but not always. As Mr. Pear reported, some beneficiaries have found that their doctors won't accept patients enrolled in private fee-for-service plans. Others have been shocked to be hit with much higher co-payments than under traditional Medicare — as much as $100 a day for the first 20 days in a skilled nursing facility for which no co-payment would have been charged under traditional Medicare....; 4:36 PM