Medicare What's Buzzing

The most cost-effective way to strengthen Medicare

Written by Diane Archer

Tom Joyce reports for The Center Square on the $1.3 trillion in Medicare Advantage and other government waste over the next decade–overpayments that could go towards improving access to health care rather than increasing revenues for the corporate health insurers offering Medicare Advantage plans. The Proactive Strategies Group explains that this $1.3 trillion is not paying for medical care, and Congress should reclaim it.

While it’s not at all likely that Congress will reclaim the full $1.3 trillion, there is a possibility it will wipe out around $350 billion of this waste. The bipartisan No Upcode bill has a chance of passing this upcoming Congress; the bill would stop some of the worst insurer practices that enable them to exaggerate the health status of their enrollees and generate government payments they have not earned.

The Proactive Strategies Group (PSG) identifies several different buckets of waste. In addition to overpayments resulting from excessive insurer charges to cover enrollees, which the PSG pegs at $400 billion over ten years, PSG would end the $150 billion in quality-bonus payments to insurers, as well as $387 billion in non-medical spending and $200 billion in “self-dealing.” In addition, the government pays Medicare Advantage plans $30 billion a year to cover veterans, which the veterans do not use.

There’s no arguing with PSG on the overpayments. But, these overpayments should not go back into the insurers’ pockets in the form of additional money for subsidies in the Affordable Care Act (ACA) plans. The ACA is also a hotbed of wasteful government spending on corporate health insurers which deliver poor coverage at high cost. While it is true that 24.3 million Americans need help paying for their ACA coverage, investing in insurers is unsustainable.

The overpayments should fund cost-effective strategies for bringing down health care costs. So, on this, I share the radical view of The Freedom Caucus, which is against continuing the ACA subsidies, recognizing the consequences could be harsh. But, they need not be.

The Medicare Payment Advisory Commission (MedPAC) has, year after year, called out the efficiencies of traditional Medicare, the government-administered Medicare program. MedPAC explains that the government spends 22 percent more for each person in Medicare Advantage than it would spend in traditional Medicare. People with Medicare all pay for this waste in the form of $220 billion more in Part B premiums over ten years. That is wrong.

The smartest, most cost-effective way to reallocate the overpayments is to invest in a stronger traditional Medicare program, adding an out-of-pocket cap, and expanding it to the people who now get coverage through the Affordable Care Act. Not only would that deliver greater bang for the government’s buck, in terms of better benefits at lower cost, it would guarantee Americans the choice of reliable long-term health insurance coverage that the insurers have shown over and over they are not willing or able to ensure.

Here’s more from Just Care:

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