OPINION:
Believe it or not, there’s a federal government program that, by and large, works. It’s popular and getting more so. Success has put Medicare Advantage and its program administrators (insurance companies) in the sights of regulators and policymakers. They paint a picture of a program that is bilking its customers and the taxpayers and leaving a more meritorious program (traditional fee-for-service Medicare Medicare) to struggle for its share of deserving customers.
Congress created Medicare Advantage in 2003 to harness the power of market incentives and private insurers to better manage care and control costs for America’s aging population. Like accountable care organizations (part of traditional Medicare), Medicare Advantage was designed to allow health plans to compete based on price and quality within a structured market. The Medicare Advantage program has been a raging success in many respects — affordability, consumer satisfaction, program enrollment and quality of care.
Yet the Biden-Harris administration has prioritized efforts to reshape the program, perhaps believing Medicare Advantage’s popularity is threatening the quest for single-payer health care that many in the Obama and Biden-Harris administrations thought was inevitable after the passage of the Affordable Care Act.
If anything, a Harris-Walz administration looks to be more hostile to Medicare Advantage. As a senator, Vice President Kamala Harris voted for Sen. Bernie Sanders’ 2019 Medicare for All Act, which would have done away with private insurance. When that bill failed, she introduced her own, slightly watered-down Medicare for All bill. In a Democratic presidential debate in 2019, she was among 10 candidates to raise their hands when asked if they thought the U.S. should insure illegal immigrants. By all accounts, Minnesota Gov. Tim Walz holds similar views, declaring that “health care is a fundamental human right.”
The Wall Street Journal recently reported that the program’s insurers have been over-coding its customers’ health issues in a practice that is tantamount to defrauding the taxpayers. To translate, the claim is that private insurers are identifying “too many” health markers (red flags) for their customers, meaning higher payments from the government. Whether insurers are bilking the government or robustly accounting for the risk faced by their customer pool likely comes down to where one sits.
Medicare Advantage embraces the practice of looking at the whole patient and managing care across providers to improve health outcomes and reduce ultimate costs. Conversely, traditional fee-for-service Medicare focuses on one problem at a time, never taking a holistic view. This design gives providers a different incentive structure to both treat patients and manage costs.
Ironically, the outside advisers and advocacy organizations condemning Medicare Advantage’s holistic practices clamored for a shift away from the fee-for-service model when the Affordable Care Act passed. In a 2012 journal article, Ezekiel Emanuel, Don Berwick and Neera Tanden (currently head of the Biden-Harris Domestic Policy Council) stated: “Fee-for-service payment encourages wasteful use of high-cost tests and procedures. Instead of paying a fee for each service, payers could pay a fixed amount to physicians and hospitals for a bundle of services (bundled payments) or for all the care that a patient needs (global payments).”
Bundling is what Medicare Advantage does and does well, creating greater efficiencies and allowing plan administrators to offer more to beneficiaries. This should be a good thing. Yet Medicare Advantage’s critics are troubled by the fact that private companies are making profits. The loser has been Medicare Advantage’s primary competitor — government-based, fee-for-service Medicare, whose plummeting customer base and increasing costs threaten the key to any single-payer, government-mandated health care program — a large, socialized risk pool (i.e., making sure enough healthy or wealthy people can balance out the unhealthy and poor customers).
Now Mr. Berwick, who served as administrator of the Centers for Medicare & Medicaid Services under President Barack Obama, once in agreement with the bundling of services, is now an ardent critic of Medicare Advantage. Mr. Berwick is a senior fellow at the Center for American Progress, perhaps the most powerful special interest organization influencing the Biden-Harris administration policy.
This year, the center released an analysis of what it termed Medicare Advantage overpayments, placing the estimated cost between $83 billion and $127 billion in 2024 alone. When reporting on administration efforts to reshape Medicare Advantage, the media has reliably turned to Mr. Berwick and a coalition of organizations named Physicians for a National Health Program. The group even cited Mr. Berwick specifically about its Medicare Advantage policy objectives and asserted: “Medicare Advantage plans have been making extremely high profits. What’s going on now are long overdue policy changes to bring their pricing and coding practices back into line.”
Medicare Advantage critics appear to deride the provider’s profit motive and ignore improved consumer choice, patient satisfaction, lower deductibles, and a broad range of benefits. Worse, the government’s own analysis appears to ignore key differences in the structure, incentives and holistic (or narrow) coverage of each program — a classic example of comparing apples to oranges.
Reshaping Medicare Advantage could also advance the administration’s all-consuming equity platform, as a recent CAP paper envisioned, stating that “combining MA payment reforms with improvements to traditional Medicare is an important strategy for advancing health equity.”
Perhaps President Biden’s inadvertent boast “we beat Medicare [Advantage]” wasn’t so inadvertent.
• Martin Hoyt is the director of the Public Health Reform Alliance.
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