Private insurance companies are aiming to enroll 50% of Medicare enrollees in their Medicare Advantage plans by 2025. They are well on their way with 37% of the market in 2019.
Here are three reasons why this is a problem for Medicare:
1. Medicare Advantage plans cost the government more than original Medicare. Original Medicare has only a 2% administrative cost while Medicare Advantage plans have overhead costs of between 13 and 19%. In fact Medicare Advantage plans are creating more profit than traditional private health insurance, a 5% yield compared to 4%. And Medicare Advantage plans are propping up the private insurance industry in a growing way. In 2016, 60% of the top five health insurers’ revenue came from public plans, Medicare and Medicaid.
2. Medicare Advantage plans cover the healthy. Insurers who sell Medicare Advantage plans use multiple tactics to attract healthy Medicare enrollees who will cost less. They include gym memberships, sell plans in senior centers or contract with employers and unions to cover retirees. And Medicare Advantage plans contain incentives for seniors to leave the plans when they have significant illnesses.
Dr. Weisbart describes these tactics here: https://www.statnews.com/2018/01/17/medicare-cuts-improvement/
3. Medicare Advantage plans restrict care. Medicare Advantage plans use narrow networks to limit where enrollees can seek care, unlike original Medicare plans that allow enrollees to see any doctor who accepts Medicare. And they deny care even when they are supposed to cover it, the Office of the Inspector General found that 75% of claims appeals were overturned between 2014 and 2016. Sadly, only a small percentage of seniors are able to navigate the appeals process to have their claims covered.
In summary, original Medicare covers the enrollees with the greatest health needs while Medicare Advantage plans cover the healthiest and eat up an increasing proportion of our Medicare dollars. This is not sustainable and the longer it continues, the more seniors will be harmed.
A National Improved Medicare for All that is universal and public (like original Medicare) is the best solution to save Medicare and guarantee that people receive health care when they need it. By putting everyone into the same system, patients and providers, and running a low overhead, we will use our healthcare dollars for health care, not corporate profits.
Medicare Advantage plans only advantage the private insurers. They are a detriment to our healthcare system.