Medicare Advantage overbilling has cost taxpayers about $10 billion per year

OPINION:

With taxpayers facing an astounding $31 trillion in federal debt, it’s more important than ever to find sensible solutions that keep spending under control. Instead, politicians and special interest groups are determined to shut down fiscal reforms through fearmongering. At his State of the Union address, President Biden warned that Republicans are trying to cut entitlement programs and railed against any reductions — even though his own administration has made similar suggestions.

Insurers poured more than $4 million into Super Bowl ads warning of the dire consequences of Medicare Advantage cuts. The reality is that unless Washington gets its fiscal house in order, the people will be on the hook for runaway taxes, higher prices, and thinly stretched public services. Lawmakers do have the ability to cut spending without undermining the financial security of millions of Americans.

Between not-so-memorable Super Bowl ads, millions of fans were briefly held captive by the dubious doomsaying of the Better Medicare Alliance. The group lamented lower-than-expected revenue from privately administered Medicare Advantage plans. The ad then instructed concerned beneficiaries to call the White House in opposition to any spending slowdown.

In reality, the federal government is merely proposing to correct previous overbilling by insurers while still increasing spending on beneficiaries. One rule change being implemented by the Centers for Medicare & Medicaid Services will make it easier for the federal government to audit Medicare payments to insurers and claw back past overpayments.

This is no small issue, given that Medicare Advantage overbilling has cost taxpayers about $10 billion per year. The government’s clawback “threat” of $3 billion to $5 billion is just the start of a long, much-needed process to recover those funds. Even assuming a figure closer to $5 billion, these corrections will amount to only about one-fifth of 1% of Medicare payments to insurers over the period being audited. And while CMS is on the cusp of implementing other reforms that could reduce payments based on risk assessment changes, offsetting payments will result in a net increase of around 1% in Medicare spending per person by 2024. Deep-pocketed advertisers are concerned that the spigot of taxpayer dollars will run slightly more slowly than before.

The truth is that far more can be done to slow down expanding Medicare spending. America’s largest entitlement programs have remained largely unchanged since the New Deal and the Great Society. The Social Security Amendments of 1983 did implement a gradual increase in the Social Security retirement age (from 65 to 67), and those who turned 62 in 2022 now must wait five more years before getting full benefits. Just as before, however, people can start taking Social Security benefits at 62 as long as they are willing to collect fewer benefits leading up to full retirement age.

The Medicare eligibility age has remained stuck at 65 since then-President Lyndon Johnson signed the Medicare Act into law in 1965. Putting the Medicare age back on parity with the full Social Security retirement age would have significant budgetary benefits. The federal government would likely raise the age gradually, perhaps by three months per year. If the age hike were fully implemented, taxpayers would save about $20 billion per year, or $200 billion over a 10-year period. Even if the flow of federally funded health insurance subsidies were increased to cover low-income residents aged 65 to 67, the federal government would still save roughly $100 billion.

Reducing Medicare overbilling could save even more taxpayer dollars and deter future abuse of federal payments. While fiscal reforms will almost certainly encounter political hostility and implementation issues, doing nothing would be far worse. It is time to get the debt under control and give taxpayers a reprieve from endless IOUs. Scare tactics during the big game will not change the present situation.

• David Williams is president of the Taxpayers Protection Alliance.