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**FEBRUARY 1, 2023**
Kuttner on TAP
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**** Can Medicare Advantage Be Contained?
The Biden administration is increasing audits of abuses-a good start,
but not enough.
Medicare Advantage is a lucrative private insurance product masquerading
as part of Medicare. It's actually an HMO for seniors, offered by
every major insurance company, using the trusted Medicare brand and
relying on Medicare payments.
Medicare Advantage programs attract customers by covering some things
not covered by traditional Medicare, such as vision care and hearing.
They compensate for the added cost-and more-by "managing" (and
denying) nominally covered services much more aggressively than public
Medicare; by targeting their marketing on relatively healthy (and less
costly) seniors; and by overcharging the government
<[link removed]>
by abusing the system of risk adjustment in which government pays extra
for more serious conditions.
Because of the extra coverage, Medicare Advantage plans are popular and
they are rapidly crowding out public Medicare. By the end of this year,
more than half of all people enrolled in Medicare will be in Medicare
Advantage.
On Monday, the Biden administration took a small but important step
toward reining in these abuses. The Department of Health and Human
Services issued a rule
<[link removed]>
that will increase the auditing of these plans.
Sample audits by HHS found a pattern of these plans systematically
overbilling HHS by exaggerating the patient condition reported, a
strategy known as upcoding. HHS expects to collect about $4.7 billion
over a decade by clawing back improper overcharges. Meanwhile, the GAO
issued a report yesterday <[link removed]>
on extra services provided by Medicare Advantage programs, and urged HHS
to monitor these offerings more closely.
Despite the extra coverage ostensibly provided, studies have found that
Medicare Advantage plans are more profitable
<[link removed]>
than most other health insurance industry products, because of the
opportunities they provide to game the system. And that suggests that
there is a much larger problem here that won't be solved by a
cat-and-mouse game of more aggressive audits-creeping privatization.
Medicare was enacted in 1965 as a public program, but its coverage was
not comprehensive. To get full coverage, you had to purchase
supplemental "Medigap" insurance-offered by private insurers.
Then Medicare Advantage was added in 1997 (initially called Medicare
Plus Choice) as a privatized HMO variant. Since then, optional drug
coverage was also added as a purely private program using the Medicare
brand in 2003. The Affordable Care Act also piggybacks on private
insurance products, with no public option; and every year there is less
real competition and higher costs.
The larger lesson is that partial privatization insidiously leads to
more privatization, leaving government to pay the added expense. Despite
the promises of greater efficiency, it doesn't save costs but adds
costs, as more money goes to industry middlemen and government has to
spend more on monitoring.
In the 1990s, when the Clinton administration (!) added the option of
privatized Medicare HMOs, there were also efforts to partly privatize
Social Security by allowing younger people to divert some of their
anticipated benefits into private investment accounts, managed by Wall
Street investment firms for a fee.
We dodged that bullet, and Social Security stayed public. And the Biden
administration, to its great credit, has started reversing the past
moves to privatize the VA, our one oasis of efficient socialized
medicine.
But Medicare Advantage will complicate the politics of getting to
universal public health insurance, which is a heavy lift all by itself.
Medicare for All doesn't work if it includes privatized Medicare
Advantage. Best to keep public programs public.
~ ROBERT KUTTNER
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Mortgage Bankers Scrambling Over Conservative Court Ruling
<[link removed]>
Faced with the potential invalidation of CFPB's funding structure, the
top lobbyist for mortgage companies asks Congress to write the
agency's rules into law. BY DAVID DAYEN
The Slow Extraction of Lead Water Pipes
<[link removed]>
President Biden has promised to replace all of the lead service lines in
the country, but there's not enough money and not enough time. BY
RAMENDA CYRUS
Joe Manchin's Dumb Budget Idea Already Failed Before
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In 2011, Congress created a 'super committee' to come to a
bipartisan compromise on austerity. It didn't work. BY RYAN COOPER
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