By Ed Weisbart for STAT News

The Republicans are right. We should cut Medicare. And I know how: Keep Medicare’s funding for actual health care but eliminate bureaucratic waste, profits, and the expensive and preposterous ban on negotiating drug prices. In other words, get rid of Part C and Part D and absorb the extra features into traditional Medicare.

Strong majorities of Americans across the political spectrum agree that Medicare needs to negotiate the price of prescription drugs. Prices here are roughly double what patients in other countries pay for the same drugs. Over the next ten years, Medicare is projected to spend $1.5 trillion on prescription drugs. Clearly, negotiating drug prices would save a lot of money.

Medicare Advantage, formally known as Medicare Part C, was created as a way for the private insurance industry to help control the cost of Medicare. But instead of saving taxpayers money, these for-profit insurers successfully lobbied the federal government to pay them significantly more than would have been paid for comparable patients in “traditional” Medicare.

Although Advantage plans aren’t allowed to overtly exclude costly (read: unprofitable) patients, they have found ways to push high-cost patients back into traditional Medicare by charging high copayments for drugs and services that are mostly used by high-cost patients. For instance, the Advantage plans have raised copayments particularly quickly for ambulance services, home health care, partial hospitalization, and inpatient services. A new analysis shows that the resulting shift of high-cost Advantage patients to the traditional Medicare program saved the for-profit Advantage plans $5.2 billion in 2007-2009.

Advantage plans save additional money by limiting care. Compared to traditional Medicare enrollees, seniors on Advantage plans received 24 percent fewer diagnostic tests, 38 percent fewer flu shots, and 15 percent fewer colon cancer screening tests. That’s just not good medicine. Related: How Alex Azar could try to shake up drug prices through Medicare Part B

Because Medicare pays Advantage plans a higher premium for sicker seniors, Advantage plans have learned to cherry-pick healthier seniors and lemon-drop the sicker ones. For example, Medicare pays Advantage plans several thousand dollars extra for patients with heart failure. But insurers know that heart failure ranges from nearly undetectable (and inexpensive to care for) to overwhelming (and very expensive to care for). Insurers have become remarkably effective at attracting the undetectable and shunning the overwhelming. Witness the mobile echocardiogram units that provide free screening for heart failure, a strategy guaranteed to identify trivial — but reimbursable — disease.

And what is the “advantage” of throwing tax dollars at private insurers whose overhead averages 30 percent, compared to a bit over 3 percent for traditional Medicare?

Medicare Advantage insurers have learned how to maximize their payments from the federal government. They have learned to “upcode” — overestimating their members’ disease burden and justifying higher federal reimbursements — to the tune of $2 billion a year. Between upcoding and other schemes, Medicare Advantage plans are paid an average of 105 percent of what comparable patients would cost the traditional Medicare program.

Medicare Advantage is an increasingly popular choice among seniors, and now attracts more than 18 million members. The growth is easy to understand: These plans often come with richer benefit designs and reduced financial exposure for patients. But the trade-off is narrow networks of physicians and hospitals. More than one third of Advantage plans fail to include even a single National Cancer Institute center. None of the Advantage plan networks in the New York City area, for example, include Memorial Sloan Kettering Cancer Center.N

Patients with short-term nursing home stays are nearly three times more likely to switch out of an Advantage plan and those with long-term nursing home stays are five times more likely. Twenty-seven percent of those leaving plans with relatively high disenrollment rates do so because of problems getting needed care; 41 percent leave because their preferred provider is not in the plan’s network. The sicker you are, and the more you actually need access to your choice of health care, the less advantage you see to an Advantage plan.

Medicare Advantage plans continue to grow in popularity, now attracting 31 percent of all Medicare beneficiaries. People make this choice because most Advantage plans offer reductions in copays and deductibles, along with enhanced benefits like membership in gym clubs or including a Medicare Part D pharmacy benefit. We could embed these modest features into traditional Medicare and still reap substantial savings for the national budget.

The arithmetic is easy, the benefits are clear, and the money is there. Take the profit motive out of Medicare to save billions. It’s just a matter of political will.

Ed Weisbart, M.D., is a family physician and chair of the Missouri chapter of Physicians for a National Health Program.

Recent News

Single Payer Resources

Join H.O.P.E.

Leave a Reply

Your email address will not be published. Required fields are marked *