Defrauding Seniors

Bill Scher

There is more evidence that partially privatizing Medicare is currently hurting our seniors.

Private insurers already have been given a role in delivering Medicare coverage. In addition to private companies providing “Part D” prescription drug coverage, seniors can enroll in “Medicare Advantage”—private plans that supposedly save money.

But back in December, Families USA (PDF file) found the opposite was true.

…private plans reduce costs by recruiting the youngest and healthiest beneficiaries, a practice known as “cherry-picking.” The result is extreme overpayments to the private managed care plans …

…In 2005 alone, taxpayers lost $2.7 billion in overpayments [while i]nsurance companies that sell Medicare Advantage plans are substantially overpaid to market their plans…

And Monday, The New York Times reported that some insurance companies are engaging in unethical marketing practices, getting seniors to sign up for plans with higher co-payments than traditional government-administered Medicare.

It also reports:

…Richard S. Foster, chief actuary for the Medicare program, said “the additional payments to Medicare Advantage plans, above and beyond the costs” of traditional Medicare, were causing higher premiums for all beneficiaries and speeding the depletion of the Hospital Insurance Trust Fund for Medicare.

Foster, you might recall, was threatened with termination by the Bush administration for trying to give Congress objective cost estimates for the president’s prescription drug plan.

Congressional leaders are looking to fund expanded health coverage for children by ending the overpayments to Medicare Advantage, while insurance companies are lobbying furiously to save their handouts.

But ending the handouts is only part of the solution. Ending the partial privatization is ultimately what’s necessary.

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