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**MARCH 28, 2022**

Kuttner on TAP

Invisible Privatization

****

Medicare, the crown jewel of American health care, is being stealthily
devoured by health insurance companies.

One of the real dangers to the use of government to help ordinary
people-the core proposition of the Democratic Party since the New
Deal-is creeping privatization. A program is nominally public, but
for-profit companies worm their way in, making the program less
efficient and more confusing. Because it's still branded as a public
program, the government takes the fall. (Can't government do anything
right?)

Exhibit A is health insurance. A in this case stands for Medicare
Advantage, a sneaky program of for-profit health plans that bill
Medicare and use the Medicare brand but fragment the system and add
costs.

The latest report

of the Medicare Payment Advisory Commission warns that 46 percent of the
62 million Medicare beneficiaries now use these private plans, and that
the percentage will exceed 50 percent by next year. In other words,
original, public Medicare will soon constitute a minority of the
program, and on the current track it will continue to shrink rapidly.

Medicare Advantage was added in 1997, supposedly as a way to increase
consumer choice and save the government money. The savings never
materialized
,
and in fact Medicare Advantage drastically restricts consumer choice.

Unlike conventional Medicare, a Medicare Advantage plan ostensibly
provides more coverage of items like prescription drugs, hearing aids
and eyeglasses. But standard Medicare allows free choice of doctors and
hospitals, while Medicare Advantage products are strictly "managed."

This means access to providers is rigidly restricted, and many medical
needs that are covered in theory are denied in practice. Medicare
Advantage companies also target their marketing to relatively healthier
seniors. The result has been a kind of "death spiral" for public
Medicare, as the government shoulders the burden of the oldest, sickest
seniors.

This comes on top of the use of the Medicare brand for so-called
Medicare Part D, drug insurance sponsored by private insurance companies
(who have done nothing to hold down spiraling drug costs)-another
insidious form of Medicare privatization.

Now comes an even more dire threat. The Biden Administration has
continued much of a Trump-era plan that encourages insurers to become
"Direct Contract Entities
." 
This means they function as payment intermediaries between Medicare and
the doctors and hospitals that provide care. It shifts the insurance
function to for-profit companies, and privatizes what remains of
traditional Medicare.

By contrast, America's other great universal program, Social Security,
never let the privatizers get their foot in the door. So Social Security
is still public, universal, efficient, simple to use, and a credit to
government.

Privatization is an insidious slippery slope. Privatize some parts of a
public program and the government is well on the way to privatizing all
of it. Costs to government go up, and into the pockets of
intermediaries. The savings come in the form of denied care. The first
step towards efficient and universal health coverage is to purge
Medicare of all its commercial parasites.

****

~ ROBERT KUTTNER

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