"The Medicare Privatization Scam"

Article by Trudy Lieberman in the July 16/23 issue of The Nation. (You might wish to subscribe.) This is something about which to contact your representatives in Washington.

[A]fter 2003 the government began shoveling huge sums of money into the Medicare Advantage plans [created under the Medicare "Part D" drug benefit] to entice seniors to leave the traditional program--in effect subsidizing privatization even more and bringing right-wing think tanks like the Heritage Foundation closer to their objective of ending Medicare as social insurance. The ultimate goal, of course, is to make seniors bear future costs, sparing their benefactors the need to pay more taxes to keep Medicare afloat. This year the government will pay insurers on average 12 percent more than it costs to provide the same benefits to people who stay in the traditional program, according to the Medicare Payment Advisory Commission . . ., an independent group that advises Congress. HMOs will get 10 percent more, but private fee-for-service plans will get a whopping 19 percent more, a subsidy that lets them offer rock-bottom premiums and lots of extras--at least for now. . . .

A report issued earlier this year by California Health Advocates and the Medicare Rights Center found that [health insurance] agents had misled beneficiaries about private fee-for-service plans. Although agents told them they could go to any doctor, many have had trouble finding doctors who would accept their coverage. In June seven insurance companies said they would suspend the marketing of private fee-for-service plans until they can prove to Medicare officials that agents understand the policies and their sales materials are accurate, a voluntary move unlikely to hurt the bottom line. Humana released a statement saying the suspension would affect 2007 earnings by no more than 2 cents a share. The move, of course, is a ploy to deflect attention from the real issue of overpayments. Pete Stark, who chairs the House Ways and Means Committee's health subcommittee, said the move "will do virtually nothing to protect Medicare beneficiaries and is a pathetic attempt to pre-empt Congressional action."

The story of Humana is emblematic of a major transition in healthcare, to a more privatized system in which insurance companies can discard policyholders when they are no longer profitable. This raises the question: If the private market doesn't provide long-term, effective and efficient care, why does the government have $50 billion to subsidize companies while claiming not to have the same $50 billion to pay for care directly?

What a mess.