“If you’re signing up for Medicare benefits this open enrollment, odds are you aren’t actually enrolling in the traditional government program that people may envision. More than half of Medicare beneficiaries are now choosing an alternative version of the program administered by private companies.
Medicare, the paragon of America’s welfare state, is undergoing a subtle but fundamental transformation from government program to public benefit provided by private companies, a shift with major implications for both patients and taxpayers. This alternative version of Medicare, known as Medicare Advantage, now covers more than half of the program’s 60 million enrollees, or about 31 million Americans — nearly double its share 10 years ago.”
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“Medicare Advantage allows private insurers to offer their own plans that provide Medicare benefits, as well as some additional perks not available in the original program. The secret to the program’s success is simplicity. Traditional Medicare is a fragmented program: Part A covers hospital care, and Part B covers outpatient services. Patients must enroll in a separate Part D plan for prescription drug coverage that is administered by private insurers. Most people also purchase supplemental coverage, extra insurance that helps reduce their out-of-pocket costs.
Medicare Advantage, also known as Part C, combines those benefits into one insurance plan that also includes an annual limit on out-of-pocket costs, something that does not technically exist in regular Medicare.
But the benefits to patients seem to come at a cost to taxpayers. Though the health insurance industry disputes these findings, MedPAC, the independent committee tasked with overseeing Medicare on Congress’s behalf, found Medicare Advantage plans cost the federal government more money per patient than the original program would have if those same people had stuck with the traditional benefits.
Private companies are also making healthy margins on their Medicare business.”
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“Patients have clearly found something to like in what Medicare Advantage offers. The program was established in 1997 to give people a streamlined alternative, a private option less overt than more recent GOP voucher proposals.
But scholarly research and media investigations have revealed notable downsides in turning over a program that covers America’s seniors, the people who need and use the most health care, to private companies. Medicare Advantage enrollees are more likely to report trouble affording health care than people on traditional Medicare. Some of the behavior by Medicare Advantage plans, such as using AI to decide when to stop covering services for their enrollees, may be becoming more common in the private sector but is still unheard of for public programs.
The trade-off the United States seems to be making is accepting more administrative bloat and more stringent provision of benefits in exchange for a more navigable Medicare plan. The trade-off is one other countries have made as they designed universal health care programs. (A similar trend is underway in Medicaid.)
But as concern grows about Medicare facing a potential financial cliff, and evidence mounts about the costs of Medicare Advantage, the risks of the trade-off are becoming clearer. Medicare is no longer what it used to be: Once the epitome of government-run health insurance, its benefits are on the verge of being primarily funneled through private companies. Any attempts to change the program will have to wrestle with that reality.”
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“Why the movement? In a 2021 analysis published in Health Affairs, Ken Terry and David Muhlestein observed that “we’re witnessing the rapid privatization of Medicare” and offered an explanation: Medicare Advantage plans “offer beneficiaries a better deal than traditional Medicare.”
The premiums people pay for a Medicare Advantage plan can be significantly lower than the combined cost of supplemental coverage and a Part D plan — less than $50 compared to more than $200 on average, per Terry and Muhlestein — with the added benefit of having only a single insurance card. According to a 2022 Commonwealth Fund survey, the additional benefits offered by Medicare Advantage plans (such as dental or vision) and the limits on out-of-pocket costs were the most common reasons seniors gave for choosing the alternative over the original program.
In general, patients with traditional Medicare and people with Medicare Advantage say they have similar satisfaction with their benefits. On some metrics, the latter group excels; people with a Medicare Advantage plan are more likely to have a regular doctor and to say they have received preventive health care services. With a few exceptions for particular medicines, Medicare Advantage customers report fewer problems accessing their prescription drugs, too.
But people enrolled in Medicare Advantage also experience a unique set of problems compared to people who choose the original program.”
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“A higher percentage of Medicare Advantage enrollees report having problems affording care (about 19 percent, per a 2021 KFF analysis) than those on traditional Medicare (15 percent), though people on the original program without supplemental coverage had the most problems with affordability (30 percent). (Most people on Medicare do purchase this coverage.) Black Americans and people with lower incomes were more likely to report having trouble paying for health care while enrolled in Medicare Advantage.
Other findings appear worrisome, too. Medicare Advantage patients are less likely to receive medical care at the highest-rated facilities for their particular needs, compared to people with traditional Medicare, a reflection of more restrictive provider networks. Families also reported more satisfaction with end-of-life care when using traditional Medicare.
Specific business practices by Medicare Advantage plans, and their consequences for patients, have also been called into question by investigative reporting and government inquiries over the past few years, practices that seem to run counter to Medicare’s function as an entitlement program for Americans over 65 and those with long-term disabilities.
Earlier this year, STAT reported on the increasing use of AI algorithms by these plans to determine when to cut off benefits for a customer. The lead example of their reporting was an 85-year-old woman with a broken left shoulder, whose insurer followed an algorithm that said she should be ready to leave a nursing facility and return home within 17 days.
On the 17th day of her stay, the insurer said it would no longer cover the bills for her stay, even though her doctors and nurses observed that the woman was still in extreme pain and incapable of doing basic activities, such as dressing herself or going to the bathroom. It took more than a year, and a federal judge’s order, for the patient to receive payments for the three additional weeks she needed to stay in the nursing facility. Doctors shared other stories of patients who saw benefits withdrawn at the end of their life, leaving their families to fight over the leftover bills for years after their loved one had died.
A report from federal investigators published in April 2022 found that tens of thousands of Medicare Advantage customers were denied coverage for services they should have been entitled to. A significant number of prior authorization denials (13 percent) and payment denials (19 percent) reviewed by the investigators were for services that should have been covered by the program but were not.
“Denied requests that meet Medicare coverage rules may prevent or delay beneficiaries from receiving medically necessary care and can burden providers,” they wrote. “Even when denials are reversed, avoidable delays and extra steps create friction in the program.”
In addition, as the New York Times reported last October, most of the largest Medicare Advantage insurers have been the subject of federal audits that found they improperly billed the program and of litigation that accused them of fraud. Taken together, the plans overbilled Medicare by between $12 billion and $25 billion in 2020, depending on the estimate.
Though Medicare Advantage was first established as a tool for reining in spending, these private plans instead seem to be perpetuating the program’s solvency crisis.
According to MedPac, since 2004, Medicare has always paid more to Medicare Advantage insurers for the cost of covering their customers than the program would have spent if the same beneficiaries had instead been enrolled in traditional Medicare. Some years, the private plans were receiving a nearly 20 percent markup compared to the original benefit structure.”
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“The growth of Medicare Advantage is contributing to the financial crunch. Those plans receive funding based on the type of service provided to their customer, which means money for hospital care comes from Part A. Annual Part A payments to Medicare Advantage plans are expected to increase from about $176 billion in 2022 to $336 billion by 2030.
With revived concerns over Medicare’s solvency and evidence of excess spending in Medicare Advantage, policymakers are starting to look at making changes to the program. But that won’t be easy.”
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“Health insurers are going to fiercely defend their Medicare Advantage business against any proposed cuts”
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“It is difficult, at this point, to imagine the Medicare program without Medicare Advantage. The question is whether policymakers can make it more cost-effective and crack down on insurer behavior that runs counter to the program’s objectives. Recent events suggest that if they try, they will have a fight on their hands.”
“the White House points to a 2022 report to Congress from the Health and Human Services, Labor and Treasury departments, which found that not one of the 156 insurance plans and issuers studied were following rules requiring them to measure their compliance with the 2008 law.
The problem is actually quite simple, advocates of the Biden rules say.
“The insurers are cracking down on mental health reimbursement in order to save money,” said Sen. Chris Murphy (D-Conn.).”
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“Estimates vary, but the latest data from HHS indicates that more than half of adults with mental illness don’t get treatment. Treatment levels may be even lower for substance use conditions like opioid use disorder”
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“The new proposed regulations, from HHS and the Treasury and Labor departments, are open for public comment until Oct. 2.
If finalized, they would mandate that insurers analyze their coverage to ensure equivalent access to mental health care based on outcomes.
The companies would have to look at how they respond to requests from doctors to authorize treatments for mental illness, compared with physical ones, as well as audit their provider networks and examine how much they reimburse providers out of network.
“This is something that you would have expected the issuers and plans to be doing as part of their own internal analysis to ensure compliance,” said JoAnn Volk, co-director of the Center on Health Insurance Reforms at Georgetown University.”
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“Insurers say they agree that access to mental health care should be equivalent to that of physical health care.
But AHIP, the lobbying group for insurers, says the situation is more complicated than Biden makes out, and that workforce shortages are what’s behind barriers to care.
“Access to mental health has been, and continues to be, challenging primarily because of a shortage and lack of clinicians, which is why for years, health insurance providers have implemented programs and strategies to expand networks and increase access,” AHIP spokesperson Kristine Grow said in a statement.
The group said those include boosting telehealth coverage and integrating physical and mental health care. And it points to rising mental health care usage since the 2008 law as evidence that the law is working.”
“On abortion, on health care for transgender people, even on mental health care, the candidates were comfortable flexing governmental authority to dictate the terms of medical treatment.
But when it comes to using that same authority to protect people during a global pandemic or providing health coverage to people with low incomes, they don’t want the government getting involved.”
“Later this year, the federal government is supposed to start a serious attempt to rein in drug prices: For the first time, Medicare will negotiate with pharmaceutical companies over the prices it’s willing to pay for a short list of drugs. It’s a long-awaited change that is supposed to save the government and patients billions of dollars over time.
But the drug industry is now launching a legal fight aimed at stopping Medicare’s negotiations over prescription drug prices before they begin. The stakes are higher than just a drug price reform: The case could set an important precedent for the government’s authority to try to constrain health care prices.”
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“The Merck lawsuit focuses on the Constitution’s takings (or compensation) clause in the Fifth Amendment, which protects private owners from having property taken without “just compensation” by the government. It also raises First Amendment claims centered on the law’s requirements that drugmakers not disclose information they receive from the government as part of the negotiations. The Chamber of Commerce’s case rests on a constitutional right to due process, arguing that, because the Medicare negotiations are exempt from review by the courts under the IRA, drugmakers are being denied due process.
Taken together, the lawsuits give any judges predisposed to side with private industry over the federal government a few options for a legal foundation upon which to base a decision in pharma’s favor.
A number of legal experts say they are skeptical of these arguments. Merck’s takings clause case turns on defining a patent — an issuance from the government — as private property subject to the just compensation clause, said Robin Feldman, a law professor at UCSF, a difficult assertion. She also said the premise present in both cases — that the federal government as a health care purchaser through Medicare can’t say no to the companies it purchases drugs from and can’t dictate prices as the consumer — is “problematic.”
“It can’t be that the government as a buyer has to pay whatever a seller wants to charge,” she said. “That the government could be forced to spend itself into bankruptcy.”
Regarding the chamber’s due process claim, several legal experts have pointed out that Medicare’s various contracts with health care providers are already often generally exempted from judicial review. It is understood that this is necessary to allow the program to function; the government, as the administrator of the program, needs that authority without each of its decisions being subject to litigation.”
“Pharmacy benefit managers are companies that, behind the scenes, determine what patients have to pay for medications. They manage insurance benefits for prescription drugs, dictating which drugs are covered by insurers and what costs patients will face when they fill their prescriptions.
To do that, they negotiate discounts, or rebates, with drug manufacturers and afford privileged status to the companies that give them the best deals.
And over the past few decades, as the prescription drug market has evolved and become more lucrative, so have PBMs. They run their own mail-order and specialty pharmacies. More recently, they have begun merging with health insurers, creating behemoth companies with the power to determine where and how billions of dollars are spent within the US health system.
Pharmacy benefit managers have become known as the mysterious middlemen of the pharma trade — and as a useful scapegoat for drug companies seeking to deflect blame from their own pricing practices.
Now the Senate, as part of forthcoming prescription drug legislation, appears poised to impose new rules on them. The committee overseeing health care debated last week a slew of measures requiring PBMs to be more transparent about their business and cracking down on some of their moneymaking practices.”
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“Experts generally agree that these companies play a role in driving up drug costs for some US patients, even as they negotiate discounts with drugmakers that benefit others, and that the amount of secrecy about their financial arrangements warrants scrutiny.
But reforms to the PBM industry aren’t a cure-all for making drugs more affordable: Sanders said the PBM measures being considered in the Senate would not meaningfully lower the cost of medicine for most people, even if they would bring more accountability and transparency to the sector.”
“Hundreds of thousands of Americans lost their Medicaid benefits in April, as emergency pandemic provisions that kept people enrolled over the past few years began to end. The coverage losses are going to only grow.
In Florida, nearly 250,000 people lost Medicaid coverage in April, as states began a process to check whether everyone currently enrolled in Medicaid still meets the eligibility criteria. About 73,000 people were also deemed ineligible in Arkansas. Another 53,000 had their coverage terminated in Indiana and 40,000 were removed from Medicaid in Arizona.
Policy experts and advocates warned before the eligibility checks began that people who are still eligible for Medicaid could lose their insurance due to administrative problems, such as not receiving mail from the state or not returning documentation to confirm they are still eligible. Now the early evidence suggests that’s exactly what is happening.”
“Almost half of people on Medicare, 31 million Americans, are now enrolled in a Medicare Advantage plan, nearly double the share of 10 years ago. It is widely assumed that Medicare Advantage will cover a majority of the program’s beneficiaries within the next few years.”
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“Medicare Advantage allows private insurers to offer their own plans that provide Medicare benefits as well as some additional perks not available in the original program. The secret to the program’s success is simplicity. Traditional Medicare is a fragmented program; Part A covers hospital care and Part B covers outpatient services. Patients must enroll in a separate Part D plan for prescription drug coverage that is administered by private insurers. Most people also purchase supplemental coverage, extra insurance that helps reduce their out-of-pocket costs.
Medicare Advantage, also known as Part C, combines those benefits into one insurance plan that also includes an annual limit on out-of-pocket costs, something that does not technically exists in regular Medicare.
But the benefits to patients seem to come at a cost to taxpayers. Though the health insurance industry disputes these findings, MedPAC, the independent committee tasked with overseeing Medicare on Congress’s behalf, found Medicare Advantage plans cost the federal government more money per patient than the original program would have if those same people had stuck with the traditional benefits.
Private companies are also making healthy margins on their Medicare business.”
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“Medicare Advantage enrollees are more likely to report trouble affording health care than people on traditional Medicare. Some of the behavior by Medicare Advantage plans, such as using AI to decide when to stop covering services for their enrollees, may be becoming more common in the private sector but is still unheard of for public programs.
The trade-off the United States seems to be making is accepting more administrative bloat and more stringent provision of benefits in exchange for a more navigable Medicare plan. The trade-off is one other countries have made as they designed universal health care programs. (A similar trend is underway in Medicaid.)
But as concern grows about Medicare facing a potential financial cliff, and evidence mounts about the costs of Medicare Advantage, the risks of the trade-off are becoming clearer. Medicare is no longer what it used to be: Once the epitome of government-run health insurance, its benefits are on the verge of being primarily funneled through private companies. Any attempts to change the program will have to wrestle with that reality.”
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“In traditional Medicare, for example, patients can go to any doctor or hospital that accepts Medicare; Medicare Advantage has more limited provider networks, and patients can be on the hook for higher costs if they are treated at an out-of-network doctor or hospital.
The federal government pays Medicare Advantage plans a flat rate for the expected cost of covering their particular customers and the insurers are required to adhere to certain rules about benefits and costs. But companies still have flexibility about how to run their plans and have a financial incentive to limit expenses. The less money they spend, the more they get to keep for themselves.
Still, customers will vote with their feet and, after slower-than-expected initial uptake, Medicare Advantage is now growing so quickly that it will soon be the dominant form of Medicare.”
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“The premiums people pay for a Medicare Advantage plan can be significantly lower than the combined cost of supplemental coverage and a Part D plan — less than $50 compared to more than $200 on average, per Terry and Muhlestein — with the added benefit of having only a single insurance card. According to a 2022 Commonwealth Fund survey, the additional benefits offered by Medicare Advantage plans (such as dental or vision) and the limits on out-of-pocket costs were the most common reasons seniors gave for choosing the alternative over the original program.”
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“Medicare Advantage patients are less likely to receive medical care at the highest-rated facilities for their particular needs, compared to people with traditional Medicare, a reflection of more restrictive provider networks.”
…
“A report from federal investigators published in April 2022 found that tens of thousands of Medicare Advantage customers were denied coverage for services they should have been entitled to. A significant number of prior authorization denials (13 percent) and payment denials (19 percent) reviewed by the investigators were for services that should have been covered by the program but were not.”
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“According to MedPac, since 2004, Medicare has always paid more to Medicare Advantage plans for the cost of covering their customers than the program would have spent if the same beneficiaries had instead been enrolled in traditional Medicare. Some years, the private plans were receiving a nearly 20 percent markup compared to the original benefit structure.”
…
“The growth of Medicare Advantage is contributing to the financial crunch. Those plans receive funding based on the type of service provided to their customer, which means money for hospital care comes from Part A. Annual Part A payments to Medicare Advantage plans are expected to increase from about $176 billion in 2022 to $336 billion by 2030.
With revived concerns over Medicare’s solvency and evidence of excess spending in Medicare Advantage, policymakers are starting to look at making changes to the program. But that won’t be easy.”
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“States have outsourced much of the administration of Medicaid to managed care plans. Countries like the Netherlands have set up health systems that use private insurers, operating under strict government oversight, to provide insurance benefits to their citizens. Giving people more choice and a more streamlined experience can have its benefits, as evidenced by the popularity of Medicare Advantage in the US.
But asking private actors, with profit motivations, to administer government benefits to which people are supposed to be entitled brings risks. People are more likely to have trouble affording health care and their claims are more likely to be denied; that is true in places like the Netherlands, compared to other countries with more direct government administration, and that is true of Medicare Advantage when compared to the traditional Medicare program.”
“Perhaps the greatest success of the American health care system these last few benighted years is this surprising fact: The uninsured rate has reached a historic low of about 8 percent.
That’s thanks in part to the pandemic — or, more precisely, the slew of emergency provisions that the government enacted in response to the Covid crisis.
One policy was likely the single largest factor. Over the past three years, under an emergency pandemic measure, states have stopped double-checking if people who are enrolled in Medicaid are still eligible for its coverage. If you were enrolled in Medicaid in March 2020, or if you became eligible at any point during the pandemic, you have remained eligible the entire time no matter what, even if your income later went up.
But in April, that will end — states will be re-checking every Medicaid enrollee’s eligibility, an enormous administrative undertaking that will put health insurance coverage for millions of Americans at risk.
The Biden administration estimates upward of 15 million people — one-sixth of the roughly 90 million Americans currently receiving Medicaid benefits — could lose coverage, a finding that independent analysts pretty much agree with. Those are coverage losses tantamount to a major economic downturn: By comparison, from 2007 to 2009, amid the worst economic downturn of most Americans’ lifetimes, an estimated 9 million Americans lost their insurance.”