The Medicare Privatization Scam

The Medicare Privatization Scam

The Nation, July 16, 2007

In the next few weeks Congress will decide whether to cut $54 billion in overpayments to Medicare insurers, igniting a battle that may well determine whether the program survives. On one side are Medicare supporters, who want it to continue as a successful social insurance program. On the other is the insurance industry, which is spending millions and lobbying hard to put Medicare on a fast track to privatization, a goal long sought by fiscal conservatives and their allies in right-wing think tanks.

The seeds of the conflict were sown in 2003, when Congress passed the Medicare Modernization Act (MMA), which gives seniors a prescription drug benefit that is sold and administered by private insurers, not the government. This drug benefit, known as Part D, opened new markets for insurers, some of which have profited handsomely from the government’s gift. The story of one of those companies, Humana, a forty-six-year-old carrier based in Louisville, Kentucky, shows what’s at stake.

Before 2003 Humana, a regional company peddling health insurance, including HMOs, was hardly a household name. One of its policies had been a big money loser, and the company was struggling to dig its way out of a financial hole. Vice president Steve Brueckner called the MMA “an unprecedented opportunity to establish relationships,” and his company made the most of it. Humana gained 4 million new policyholders and reported to stockholders in April that it had amassed “record breaking revenues.” What’s more, Humana has become a national brand poised to sell policies in the non-Medicare market, where people will increasingly be forced to buy their own health coverage, especially if an “individual mandate” becomes a solution for the country’s healthcare woes. “Part D transformed the company,” says Bridget Maehr, an analyst for A.M. Best, an insurance rating service.

Humana’s game plan centered on the options the MMA gave seniors for obtaining their benefits. They could keep traditional Medicare, in which the government provides the benefits, and buy a “stand-alone” drug benefit; or they could get the new drug coverage plus regular Medicare benefits provided by one of the Medicare Advantage plans, which include HMOs, the less restrictive preferred provider organizations (PPOs) and private fee-for-service plans, which usually offer traditional Medicare benefits, drug coverage and benefits for extras like dental, vision and chiropractic care. There are no limits on specialist referrals, and seniors can choose any doctor who accepts the insurer’s fee schedule.

Some Medicare Advantage plans were not new. Medicare HMOs had been around since the 1970s. But by the late 1990s, conservatives had seized on HMOs, as well as new options such as medical savings accounts and PPOs, as ways to speed up privatization. Under the guise of “consumer choice,” always a popular concept, Congress authorized four new kinds of plans, in the 1997 Balanced Budget Act, that would compete with traditional Medicare.

In theory, private plans, particularly managed care, would reduce the program’s escalating costs. Government payments, it was argued, would allow these plans to offer both standard and extra benefits and encourage efficient, low-cost care. However, after 2003 the government began shoveling huge sums of money into the Medicare Advantage plans to entice seniors to leave the traditional program–in effect subsidizing privatization even more and bringing right-wing think tanks like the Heritage Foundation closer to their objective of ending Medicare as social insurance. The ultimate goal, of course, is to make seniors bear future costs, sparing their benefactors the need to pay more taxes to keep Medicare afloat. This year the government will pay insurers on average 12 percent more than it costs to provide the same benefits to people who stay in the traditional program, according to the Medicare Payment Advisory Commission (MedPAC), an independent group that advises Congress. HMOs will get 10 percent more, but private fee-for-service plans will get a whopping 19 percent more, a subsidy that lets them offer rock-bottom premiums and lots of extras–at least for now.

An unlikely player in the 1997 debate was the National Right to Life Committee. Worried that Medicare HMOs would euthanize old people, the committee lobbied Congress to allow private fee-for-service plans in the 1997 law as an alternative to managed care. Carriers were slow to market them, and in December 2005 only about 200,000 Medicare beneficiaries had signed up. But thanks to the federal honey pot, all that has changed. By February of this year, 1.3 million seniors had chosen fee-for-service plans, a sixfold increase that makes them the fastest-growing segment of the Medicare Advantage program.

Former House Speaker Dennis Hastert of Illinois also did his part to give an edge to certain fee-for-service plans. As Congress put the finishing touches on a catch-all bill late last year, Hastert got the House Rules Committee to insert a provision that gives sellers a larger window of time to sell these plans. They can be sold all year, not just between November 15 and March 31, the only time other Medicare Advantage plans can be sold. According to the New York Times, Aon, a large Chicago-based carrier, pushed for the change to help its subsidiary Sterling Life, the first carrier to market private fee-for-service plans in 2000. Aon recently told stock analysts that its health insurance business had a strong first quarter with good growth, “driven primarily by Sterling.” According to the Center for Responsive Politics, Aon is the twentieth-largest insurance contributor to political campaigns. It has given generously to the Illinois Republican Party and to Hastert. In the 2003-04 election cycle, Hastert received a run-of-the-mill contribution of $5,000; in 2005-06, as fee-for-service plans were becoming more important, Aon and its affiliates gave Hastert $23,900.

From the start, Humana saw gold in Medicare Advantage and embarked on a strategy of government-sanctioned bait and switch: Offering the lowest premiums in most counties across the United States (some as low as $1.87 per month), and selling through agents stationed in Wal-Mart stores, Humana signed up more than 3 million seniors just for its stand-alone drug benefit. It was willing to trade off smaller profits for the prospect of eventually switching seniors to the more lucrative Medicare Advantage plans. On average, seniors pay about $100 a year for Humana’s stand-alone plans, versus about $800 for its other Medicare Advantage plans. To get people into those other plans, Oklahoma regulators say, it paid agents commissions that were five times higher than commissions for stand-alone plans. This spring Humana announced that 100,000 people had moved to Medicare Advantage plans, and most chose private fee-for-service options. “It reflects good value for seniors and their preferences,” says Humana’s outgoing chief actuary, John Bertko. It’s also good value for Humana. Says one Washington insurance consultant: “An additional 100,000 people contributing to top line revenue is not insignificant–it’s an extra billion dollars.”

Private fee-for-service plans are also catching on with United Healthcare, Aetna and Blue Cross Blue Shield, the country’s insurance giants, which like these plans not only because of generous government payments but also because they are easy to administer. There are no cumbersome networks of doctors and hospitals to police and little oversight of the quality of treatment delivered to beneficiaries. So insurers are prospecting for new markets, selling fee-for-service plans to employers obligated to provide health benefits for their retired workers. The Michigan Public School Employee Retirement System, for example, just moved 115,000 retirees into a fee-for-service plan sold by Michigan Blue Cross Blue Shield.

Nearly 20 percent of the 43 million Medicare beneficiaries have enrolled in Medicare Advantage, up from 13 percent in 2004. Citigroup estimates that one-quarter of all beneficiaries will belong to one by 2010. “Enormous growth prospects remain,” Citigroup analyst Charles Boorady told investors in February.

All that, of course, depends on what happens in Congress. When the Congressional Budget Office estimated the bill for the overpayments at $54 billion for five years and $149 billion over ten, cuts seemed likely. After all, Medicare’s chief actuary, Richard Foster, has said that overpayments shorten the life of Medicare trust funds by two years and raise premiums that all beneficiaries pay for doctor and outpatient services. MedPAC has recommended giving all Medicare Advantage plans no more than it costs the government to provide benefits under the traditional program. “I don’t see any possible defense for the overpayments,” says Robert Berenson, MD, a senior fellow at the Urban Institute. “Managed care has been ineffective at controlling costs in the commercial sector. Why would we want to turn Medicare over to private plans and abandon traditional Medicare, where if we wanted to, we could actually manage costs?” For example, Congress could lift the MMA prohibition on negotiating lower drug prices with pharmaceutical companies. But earlier this year the Senate refused to do that, bowing to lobbying pressure from Big Pharma, which believes government negotiations will lead to the dreaded price controls.

Some HMOs have not been particularly good at improving care. A 2005 study by The Commonwealth Fund found that beneficiaries enrolled in for-profit health plans received significantly lower-quality care than those belonging to not-for-profit plans when it came to certain procedures like giving patients appropriate medications after heart attacks. (Most Medicare beneficiaries belong to for-profit HMOs.)

Despite convincing evidence for cutting payments, America’s Health Insurance Plans (AHIP), a trade association of insurance companies and HMOs, has managed to marshal strong support in Congress for continuing them; many legislators see nothing wrong with seniors reaping extra benefits from private fee-for-service plans, which they argue bring more choice to constituents, especially in rural areas without managed care. “It’s absolutely brilliant how this has been orchestrated,” says Bonnie Burns, a training and policy specialist with California Health Advocates. AHIP has turned the usual industry/consumer lobbying dynamic on its head, casting legitimate consumer groups like California Health Advocates and the Medicare Rights Center as bad guys for wanting cuts and the insurance industry as good guys for wanting more money poured into the program. Consumer groups generally advocate more money for social programs, but in this case they see the overpayments as a strategy to destroy Medicare.

To confuse legislators even more, the industry has called on its own sham “consumer” group, the Coalition for Medicare Choices, to push its agenda on the Hill. AHIP founded the group back in 1999 and still provides administrative support, according to spokesman Mohit Ghose. The address on the coalition’s website turns out to be the same one as Democracy & Data Communications, a public relations counseling firm whose clients include AHIP, Humana and United Healthcare, another carrier riding the Part D gravy train with lucrative deals to sell plans to members of AARP, the retirees’ organization. The coalition now has 400,000 members, in every state; and the group has gained 140,000 new members in the past sixty days. Its main purpose seems to be ginning up letters and calls to members of Congress “to protect choices and additional benefits provided through the Medicare Advantage program.” Sterling Life’s website, for instance, tells visitors about the Coalition for Medicare Choices and urges them to send letters–sample included. Nowhere does it say that the coalition is a creature of the industry’s trade association.

AHIP has also played the race card, forming a minority advisory committee of community leaders “to protect low-income and minority seniors from Medicare cuts.” According to its press release, members, including representatives of the NAACP, Latino and Korean groups, and churches, will “reach out to members of Congress and provide guidance as the Coalition for Medicare Choices conducts grassroots efforts in their communities.” This spring Hilary Shelton, director of the NAACP’s Washington bureau, and Rosa Rosales, national president of LULAC, the League of United Latin American Citizens, sent letters to Congressional leaders arguing that minority members would be hurt by the cuts. They cited statistics from a study done for the Blue Cross and Blue Shield Association by Emory University health economist Ken Thorpe showing that more low-income and minority Medicare beneficiaries obtain supplemental coverage from private plans than from other sources, so cuts would hurt them. (A Center on Budget and Policy Priorities analysis says Thorpe’s study is misleading because it inflates the importance of Medicare Advantage plans by excluding those who get coverage from retiree plans and from Medicaid, which is the primary source of coverage for low-income seniors.) United Healthcare has hired former Ohio Congressman Louis Stokes, a founder of the Congressional Black Caucus, to add lobbying heft to the effort. AHIP has targeted for special attention fifty legislators, primarily Democrats and members from rural areas where a lot of private fee-for-service plans have been sold.

Enmeshed in this political clash are the demands of doctors, who are facing a mandated 10 percent cut in their Medicare fees; the need to reauthorize and expand the State Children’s Health Insurance Plan (SCHIP); and the consequences of tax cuts over the years. The fate of Medicare’s overpayments may well be decided at this intersection of healthcare and budget politics. Under Washington’s budget neutrality rules, new programs or expansions must have a “pay for,” that is, money coming from an existing pot of revenue or new taxes, which isn’t likely. Medicare overpayments are the juiciest target.

The American Medical Association, a large donor to political campaigns, is eyeing the overpayments as a way to redirect money to its members, who are threatening to withhold services from Medicare beneficiaries if their fees are cut. The Center on Budget and Policy Priorities, a far less powerful voice, argues that a substantial portion of the money now going to insurers could be used to expand health coverage for some of the 9 million uninsured children, many of whom are eligible but not covered under SCHIP, setting up a confrontation between old people and children. Without savings from the cuts, the center says, it may be impossible to allocate anything close to the $50 billion over the next five years to expand SCHIP. Such an expansion would move the country closer to universal insurance coverage, which presidential candidates say they want. Of the Senate Democrats who will vote on the issue, Barack Obama and Hillary Clinton both say they support cutting the Medicare overpayments.

If AHIP wins, however, Medicare beneficiaries will lose in the long run. Some have already started to lose. “There’s an explicit decision to create a funding crisis for Medicare predicated on overpayment to private plans,” says the Urban Institute’s Berenson. MedPAC chairman Glenn Hackbarth has warned that the overpayments weaken Medicare financially and threaten the government’s ability to sustain it. Overpayments raise overall costs, and the program’s trustees have already signaled looming financial troubles for the trust funds. A little-publicized provision in the MMA requires that if the trustees estimate in two consecutive reports that more than 45 percent of Medicare’s budget in the next six years will come from general revenues (which partly finance doctor and outpatient services), the President must propose legislation to bring costs below 45 percent. Trustees say that point will be reached in 2013.

That means benefits could be drastically cut and more costs shifted to beneficiaries, hastening the conversion of Medicare from a social insurance program to a defined contribution or voucher plan, under which the government would give seniors a set amount of money each year to buy coverage from private carriers. If the money is insufficient over time, the cost of ever-rising medical care will shift to beneficiaries, who will have to pay more out of pocket for insurance or foot the medical bills themselves. “It’s a very scary thing,” says Marilyn Moon, vice president of the American Institutes for Research, a large social science research nonprofit, and a former Medicare trustee. “What looks good today could look pretty terrible in five years. If you get to the point of a defined contribution, people will be hurt.” Those hurt the most will be the low-income beneficiaries that minority groups doing the bidding of AHIP want to protect.

Beneficiaries who flock to Medicare Advantage plans because of the low premiums and the promise of extra benefits may be hurt long before full privatization becomes a reality. Marketing abuses and hidden traps in policies, reminiscent of the Medicare supplement market two decades ago, are starting to pinch. With some of the Medicare Advantage plans, seniors may end up paying more out of pocket than they would under traditional Medicare. Take hospital copayments, for example. Most private fee-for-service plans have them, but if policyholders are unlucky enough to stay in the hospital for seven days–a not-unreasonable stay for heart-valve surgery–they could spend more than the $992 hospital deductible, which (if the copay is $150-$200, the typical range) is all they would pay had they stayed in traditional Medicare.

Patients who require a lot of medications lose money for companies and are discovering that some carriers make it hard to access benefits; others change the rules, dropping some benefits altogether. Maureen Doyle of South Weymouth, Massachusetts, listened to the government and advocates who urged her to take advantage of the new drug benefit. But ever since, she has tussled with her insurer, WellCare. Several times last year, WellCare refused to authorize prescription refills. Each time she went to the pharmacy to pick up medicine, she was told she had no coverage. Each time, after numerous phone calls and correspondence, the company admitted a mistake and allowed the prescriptions. “Our government assured us that private insurers would provide the most efficient drug coverage,” says Doyle. “The casual, go-to-hell attitude of this private insurer belies this promise.” After other problems with WellCare’s marketing surfaced this spring, it announced enhanced oversight measures.

Early in the game Humana promoted its “Complete” stand-alone drug plan, which provided brand drug coverage in the so-called doughnut hole, where consumers with high prescription use have no government-subsidized Part D benefit. Humana dropped the brand drug coverage this year. It had underpriced the policy, and too many sick people were hurting the bottom line. Humana customer service representatives contacted thousands of customers who had bought the Complete plan, explained that brand coverage was being cut and suggested they seek similar coverage from a competitor, Sierra Health. Sierra, which is also dropping brand drug coverage in the doughnut hole next year, says that as many as 7,000 of its customers may have come from Humana. Humana spokesman Dick Brown says the company supports “a continuing public-private partnership with Medicare amid mounting evidence that private-sector Medicare plans are the right choice.”

State insurance regulators and advocates cite industry marketing abuses. A report issued earlier this year by California Health Advocates and the Medicare Rights Center found that agents had misled beneficiaries about private fee-for-service plans. Although agents told them they could go to any doctor, many have had trouble finding doctors who would accept their coverage. In June seven insurance companies said they would suspend the marketing of private fee-for-service plans until they can prove to Medicare officials that agents understand the policies and their sales materials are accurate, a voluntary move unlikely to hurt the bottom line. Humana released a statement saying the suspension would affect 2007 earnings by no more than 2 cents a share. The move, of course, is a ploy to deflect attention from the real issue of overpayments. Pete Stark, who chairs the House Ways and Means Committee’s health subcommittee, said the move “will do virtually nothing to protect Medicare beneficiaries and is a pathetic attempt to pre-empt Congressional action.”

The story of Humana is emblematic of a major transition in healthcare, to a more privatized system in which insurance companies can discard policyholders when they are no longer profitable. This raises a question: If the private market doesn’t provide long-term, effective and efficient care, why does the government have $50 billion to subsidize companies while claiming not to have the same $50 billion to pay for care directly?

4 Responses to “The Medicare Privatization Scam”

  1. 1 harriet rosenberg July 7, 2007 at 7:51 am

    Dear Trudy Lieberman,
    Congratulations on your fascinating article in this week’s Nation.
    Can you tell me more about the statement in the article indicating that in 1997 the National Right to Life Committee felt it had reason to worry that Medicare HMOs would euthanize old people. I am a Canadian scholar (medical anthropologist) updating a paper on aging and caregiving among the Ju/’hoansi (Bushmen) of the Kalahari (“Complaint Discourse, Aging and Caregivng…in Jay Sokolovsky ed)and one element of care for the elderly there has to do with their strong sense of personal security and entitlement to care (at all ages.) Your article and of course the movie “Sicko” (and many other sources) all point to how fragile, complicated and desperate the situation is for elders in the US. I was struck, also, by way your comment read to my perhaps naive Canadian eyes as a bombshell, but was presented in your article in a rather matter-of-fact tone. Is there data linking HMOs to death-hastening/euthanasia of elders? Having seen the footage of patient-abandonment in “Sicko” I imagine that anything is possible.
    Thank you again for you wonderful article and if you have the time I’d appreciate hearing what your thoughts are with the regard to issue I raised above.
    Harriet G. Rosenberg
    Health and Society Programme
    York University
    Toronto, Ontario, Canada

  2. 2 David Fliflet July 9, 2007 at 8:38 am

    WOW! A fantastic article of how free enterprize works. Choice is the key for seniors and until you understand Medicare assignment, the rising cost of secondary insurance, fraud and abuse that runs rampant with doctors and hospitals Medicare Advantage will always seem to be the wrong choice.

    There are poorly sructured MA plans that are not actuaraly sound and they can be a bad choice based on your health; there are good one’s out there.

    The true facts are that the drug plan works and that for most seniors Medicare Advantage that includes drug coverage is a good choice. Some doctors and hospitals are reluctant to participate even though the reimbursement schedule mirrors traditional Medicare payments primarily because it is much easier to file claims to Medicare in error or on purpose in “bundling” charges to get them paid by Medicare…why would you want to change that gravy train if you did not have to.

    It will be no boubt a dogfight in Congress to see how the overpayments comeout. The republicans and conservatives have their names stamped on the only Federal propsed plan to ever come in under budget and the Democrates can’t lay claim to any of it.

    Dave Fliflet


  3. 3 Jim Yragui July 16, 2007 at 11:03 am

    Thank you for your article, Trudy. I see deeper issues in healthcare cost today than those you mentioned, however.

    I believe the rising cost of healthcare today can be attributed to two things:
    1. Improved quality of care because of improved technology
    2. Greater complication and paperwork in re-imbursing for the care.

    Re: rising technology – ask yourself – How did your grandparents die? How did your parents die? Would they die for these reasons today, or might they still be alive?

    As an example, a friend of mine was diagnosed with cancer. I was sorry to hear it, but he said “no problem – I’ve been through this before…”
    I said, “what do yo mean?”
    He said, ” I will get one injection a month for six months”
    “What will that cost?”
    “$10,000 per injection”.
    “Yikes!!! How will you pay?”
    “With Part D, basically I only pay $7-8K total”
    Now, this is a reasonable choice – ditch your car and use a bus for transportation, or keep the car and die. Hmmmmm.

    This is a choice your parents never got to make. With that diagnosis 30 years ago, people decided to keep the car and buy a tombstone.

    You see, “healthcare” means something totally different today than it meant 30-50 years ago. So denying “healthcare” to today’s seniors begs the question – which “healthcare” are you referring to, the 1950s healthcare or the 2000s healthcare?

    Today’s healthcare is like a 787, while 1950s healthcare is like a kitty hawk biplane: It takes thousands of technical specialists to deliver the 787, but it took only two bicycle repair guys to deliver kitty hawk. Todays doctor represents thousands of specialists, all deserving to be paid. The 1950s doctor operated mostly like todays naturopath. Now, everyone knows, even in the smallest village, that you ALWAYS take care of the doctor. So, the key question is, if you want the technology, if you want to reject the hand God dealt you, thats fine, but how are you going to pay for it?

    re: Administrative cost: We need a simpler system, be it public or private (who cares! – as long as it is simpler), not a more complicated one.

    For example, the French spend only 19% of their total healthcare dollar on administrative expenses, while we are way over 30%.
    Do you know how much THAT represents? I am sure implementing this in the US would mean lost jobs to clerical workers, but what is healthcare for, paying doctors or paying paper-pushers (they exist in both the public AND private sector, by the way)?

    The billing and rebilling that goes on is our healthcare system is atrocious. In a small village, everyone knows you take care of the Doctor, even if you have no money. Give him a chicken, or fix his roof, or whatever. In a village, it doesn’t make sense to pay clerks to figure out the bill to the last penny….thats not healthcare, thats anal-retentive bookeeping. I think we have lost sight of this in our system.

    What is THAT FRENCH THING – and will someone write something on THAT?

    In summary, I consistently see healthcare cost discussions ignoring these two big elephants in the room – better technology and greater administrative cost.

    Can you comment on this?

  4. 4 peiawatch March 27, 2009 at 11:54 am

    Millions are being literally FORCED onto MEDICARE ADVANTAGE !!!!

    Bush said we have choice. He lied, again. Many retirees are literally being forced off Original Medicare onto Medicare Advantage. They do not have a choice. We are the cash cow for greedy private Medicare Advantage insurance companies. We’ve been hijacked off Original Medicare by these private Advantage companies. I suspect many on Medicare Advantage have been forced onto it in order to keep their supplement from their former employer. Former employers are forcing their retirees to take Medicare Advantage or they lose their supplementary insurance from their former employer. How can they do this? How can this be legal? Money would be better spent on Original Medicare, instead of helping private insurance company CEO’s get multimillion dollar bonuses. And the federal government was paying about 12% to 17% more for Medicare Advantage, and the participants get a smaller network, and can’t use many Original Medicare Providers. This happened to me in WV where they forced all state employee/retirees onto Medicare Advantage and also many county and municipal retirees, and others. It has also be tried in other states. If they’re doing it to state retirees they must be doing to this to people who have worked for private businesses. Please reviews my comments below. For more information about this in other states please review the document I’ve to which I have linked at the end. I haven’t really seen anything about this in mainstream media. We all hear about the senior citizen in maybe Alabama bamboozled into signing up for Medicare Advantage with disastrous effects, but you don’t hear about hundreds of thousands moved to Medicare Advantage against their wishes, often dragged kicking and screaming onto Medicare Advantage.

    Yes. Millions are being literally FORCED onto MEDICARE ADVANTAGE !!!!

    Did you know that don’t get to choose whether you want Original Medicare or Medicare Advantage? Your former employer does, and you have to go to Medicare Advantage, which is really private Medicare DISADVANTAGE, to keep you supplement.

    Medicare Advantage, has to give similar services, but not exactly all the same services in the same way as original, nor pay the same rate, nor have all the Medicare providers. They can operate it as a PPO (Preferred Provider Organization), which will probably and most assuredly be a much, much smaller network. They do not have to have all the Original Medicare providers, or even a small part of them. The Advantage Plan need meet only “CSM ratios”, Central Medicare Services Ratios, which means so many providers of a certain types within so many minutes, of so many plan participants. Since each of these private plans is small, with a small number of participants, when compared to Original Medicare, you could end up with a very small network. Say there are 5 nursing homes in you town, and 2 aren’t in you plan, and 2 are full; You end up in the worst nursing home in town. Remember the farther you live away from your former employer, the less of a network you will probably have, since it’s based on the number of participants in a given area. Also you could have problems going to specialists and better hospitals outside your home area. Say you need to go Sloan Kettering or John Hopkins. If they’re not in your plan, even through they take Original Medicare, then you could end up paying maybe 25 % to 40 % more to go there, than those on Original Medicare. So in order to use Original Medicare providers not in you Medicare Advantage network, you will have many additional charges. There will probably be double coinsurance charges, double deductible, double Out Of Pocket Maximum , same as out of network costs in other private insurances. Also the Medicare Advantage Plan can add other out of Network fess. You will also be paying any difference between any lower Medicare Advantage rate and the Original Medicare rate, if out of network. Of greater concern is that no one will be setting usual and customary charges when out of network, which means you could have to pay and additional 20% to 40+ % of the bill. Guess who pays this? You do. All this to use a provider, that everyone else gets to go to if they have original Medicare without all these extra costs, but we have to pay more with Medicare Advantage. It would work the same way with a Medicare Advantage Private Fee for Service Plan (PFFS) if you go to an Original Provider who doesn’t take their rates, then we have to pay the difference, to use an Original Medicare provider under Medicare Advantage, than when using that provider under Original Medicare with a supplement from our former employee. Lastly the Medicare Advantage provider/network can be changed yearly by your former employer, and the Medicare Advantage Plan can make changes in their network and plan details, so you really can’t count on anything. Also Original Medicare allows a second supplement, and Medicare Advantage does not. Original Medicare has a really broad network, all providers in the country who accept Medicare, so it’s nearly impossible to be out of network, and have all those extra costs.

    Medicare Advantage costs us more of our tax dollars, while the Medicare Advantage companies make outrageous profits on our tax dollars just to give out our own tax dollars and supplement premiums, and severely limit our access to many of the Original Medicare providers. We lose choice and it costs us more.

    With regards to forcing retirees off Original Medicare and onto Medicare Advantage, below is some additional information. One trick that they have is using the OPEB (Other post-employment benefits) laws, which are suppose to insure that are promised benefits are properly funded, as an excuse to cu benefits. You may ask how they do this. They get a company to do an audit of the funds and then that same company makes suggestions. Guess what they suggest – cutting benefits, and forcing retirees onto Medicare Advantage. How is that funding the promised benefits? They are doing this to retired state employees in a number of states including WV. Please have someone call me about this. There are many details that you need to know.

    This last note only applies to some people, but constituted another take away of benefits that applies only to couples, where the spouses both worked and carried insurance on themselves and each other, one through one former employer and the other through another employer related plan. With Traditional Original Medicare when they retired, Medicare, of course, is the primary payer and pays first, and then through a Traditional Coordination of benefits, and the private plan through the employer pays second, and the spouse’s plan pays third, if there is anything left to pay. (This reverses for your spouse). This situation continues even, after both are on Medicare. In other words, Traditional Original Medicare allows 2 supplements. However, Medicare Advantage does not allow 2 supplements so you are forced to drop either your spouse’s insurance or yours. So after both have worked a lifetime for their employers, and earned both supplements, Medicare Advantage won’t let you have the 2nd supplement, while original Medicare does.

    So just by forcing retirees on to Medicare Advantage, a former employer’s supplement has not only changed its benefits, but denied participants the right to participant in Traditional Original Medicare, and for those who had a 2nd supplement (for which their spouse worked) forced them to lose it. It messed up 2 to 3 insurances for each participant, with the stroke of a pen. Medicare Advantage rules steal the second supplement from participants, while providing a smaller network. Only the insurance companies win.

    Solution is to not allow this to be done period. Isn’t this a violation of some sort of Medical Civil Rights, to have to lose Original Medicare in order to keep our supplements from our former employers for which we have worked a lifetime.

    On another matter, if you want to give people a choice between government Medicare and Private Medicare, fund both the same amount per person.(Don’t pay any more for Medicare Advantage, than Original Medicare). But each private company, like original Medicare, must accept all applicants, regardless of prior health problems, and they must cover everything exactly the same as original Medicare, pay the same rates, use forms and billing codes that match original Medicare and provide access to all the same providers. They can sell a supplement to fill gaps, but one shouldn’t have to sign up for Medicare Advantage to get the supplement, and buying their supplement can’t be a condition in order to get their Medicare. I doubt, private Medicare Advantage can do this, as they are all into profit. But this would give people choice if private Medicare Advantage can match the efficiency of Original Medicare.

    Personally, I prefer Original government run Medicare. I dislike the misleading adds by the private insurance companies, about people not wanting their Medicare through a government bureaucrat. That’s rather absurd. Are not insurance companies filled with their own bureaucrats? Also they really shouldn’t just get to call themselves Medicare Advantage. Many people on Advantage Plans don’t even realize they are not on government Medicare but with a private company. These companies in their name need to say something like “Nongovernment run Medicare-like Plan”.

    Lastly, it’s my understanding that the people in our supplement plan not only required to switch from Original Medicare to Medicare to keep their employer/.retiree supplement, but also they didn’t even have to sign for this change, the former employer’s supplement just took them out of Original Medicare and put them all on Medicare Advantage.

    What can be done to prevent this???? What can you do to help?

    Please see document at

    about how this is being done in other states.

    Below is article about similar material, but this link
    takes you to a better explanation than the article below, but I can’t paste it in because it is in acrobat. Please see the above link .

    Shorter summary link below.
    AFSCME Urges Senate to Reign in Privatization of Medicare
    David R. Fillman, AFSCME International Vice-President and Executive Director of Council 13, testified at a Senate Finance Committee oversight hearing on Medicare Advantage private fee-for-service plans. Fillman told the Committee how insurance companies are targeting public retiree health care as a way to boost profits at retirees’ expense. In 2003, the Republican-controlled Congress gave insurance companies significant profit incentives to develop and market Medicare Advantage plans to replace, not supplement, Medicare. The private plans cost taxpayers and the Medicare program more – for every dollar spent for traditional Medicare benefits, it costs $1.13 for Medicare Advantage plans to provide those same benefits. The $54 billion in subsidies to these plans over the next five years advance Medicare’s insolvency and will ultimately force benefit cuts and/or increases in costs for taxpayers and beneficiaries. Even with subsidies, the private plans limit access to care and choice, cost more for sicker beneficiaries, have an additional layer in the claims appeal process, lack quality and accountability, and are allowed to change benefits and beneficiary out-of-pocket costs every year. AFSCME urged the Senate to pass legislation to stop corporate greed from ruining Medicare and our retirees’ health.
    To learn more about how these private plans undermine Medicare, and to read David R. Fillman’s full testimony, please visit the Legislation page on our website. Or go to this link:

    Please go to the above link. It really explains it all, but is in Acrobat format so I can’t cut and paste it in. It is Mr. Fillman’s Jan 30, 2008 testimony.

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