Medicare Advantage is a scam. That’s why conservatives love it.
by Ryan Cooper
February 13, 2023
5:15 AM
Patrick Semansky/AP Photo
President Joe Biden speaks about his administration’s plans to protect Social Security and Medicare and lower health care costs, February 9, 2023, at the University of Tampa in Tampa, Florida.
The conservative movement has been gunning for New Deal and Great Society welfare programs from the moment of their inception, if not before. One of Ronald Reagan’s first forays into politics was a deranged recording predicting that if Medicare were passed America would turn into a communist dictatorship. President Bush attempted to privatize Social Security in 2005. During the Obama administration, Republicans repeatedly proposed budgets containing sweeping cuts to Social Security and Medicare, and the Trump administration did the same thing (though they did not pass in either case). Sen. Mike Lee (R-UT) has proposed abolishing Social Security, Medicare, and Medicaid entirely, while others have argued it should have to be reauthorized every few years, which is an obvious pretext for cuts.
So when President Biden asserted that “instead of making the wealthy pay their fair share, some Republicans … want Medicare and Social Security to sunset,” during his State of the Union address, he was entirely correct. When Republicans responded with typical dishonest mock outrage, he sprang an apparently impromptu trap. “Folks—so folks, as we all apparently agree, Social Security and Medicare is off the books now, right?” he said, grinning broadly. When Republicans clapped in response, Biden smiled. “All right, we’ve got unanimity.”
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So now Republicans are attempting to turn the tables by accusing Biden of favoring Medicare cuts. Amusingly, Biden actually did argue for cutting Social Security, Medicare, and Medicaid various times in the 1980s and 1990s, but as we saw during the speech, he has since disavowed those views. Instead, conservatives like Sens. Tom Cotton (R-AR) and Steve Daines (R-MT) are attacking Biden for supposedly planning an attack on Medicare Advantage. He “is proposing to cut Medicare Advantage, a program used by almost 4 in 10 Arkansas seniors,” Cotton tweeted.
But this line of attack is a crock. Not only are Republicans lying about Democrats’ proposed Medicare Advantage reforms, the program itself actually is a threat to Medicare as a whole.
First, some background. Medicare Advantage is a privatized version of the program, where the government pays insurance companies to provide coverage. As I have previously explained, this was one of those extremely large-brained 1990s ideas where Clintonite neoliberals handed over core government functions to the market, assuming as a matter of quasi-religious faith that outcomes would improve.
What that meant in reality is that today, the government spends a truly stupendous amount of money, time, and effort cooking up ultra-complicated systems and regulations to keep these insurance companies from ripping off the program. The Centers for Medicare & Medicaid Services keeps a continually updated database with the health characteristics of every single one of the 61 million Medicare enrollees, which is used to determine how much insurers are paid—yet still the companies are always one step ahead.
A recent New York Times article described how most Advantage providers have been accused of fraud in court, and all but two have been cited for overbilling by the CMS inspector general. This kind of thing, along with the Kafkaesque nightmare that is any private insurance bureaucracy, is why Advantage enrollees receive roughly 10 to 25 percent less in health care spending than those in traditional Medicare. Yet Advantage costs about 3 percent more (and rising) per person. Despite these problems, Advantage has steadily grown to constitute a growing majority of Medicare enrollees, thanks in part to heavy advertising and ancillary benefits like gym memberships.
Not only are Republicans lying about the proposed Medicare Advantage reforms, but the program itself is actually a threat to Medicare as a whole.
As my colleague Robert Kuttner explains, the Biden administration moves Cotton and company are complaining about actually attempt to crack down on this crime spree. One of the principal strategies Advantage providers use to rip off the government, for instance, is pressuring doctors to load up their enrollees with lots of fake diagnoses (known as “upcoding”). This increases their enrollees’ risk score in the above-mentioned database, and thus increases the company’s payments from the government.
A new rule from the Department of Health and Human Services would intensify audits in an attempt to prevent this practice. It could and probably should have gone further: The audit program will only claw back overpayments as far back as 2018, not 2011 as regulators initially proposed. But the goal is to prevent what amounts to fraud. This is what Cotton and Daines call cutting Medicare.
To be clear, there are problems with Medicare that are projected to get worse. But they have nothing to do with the generosity of the health care benefits enrollees receive. The problems are entirely caused by skyrocketing cost bloat across the entire health care system. As a recent Commonwealth Fund report points out, America spends more by far than any other country on health care, yet has the worst health care outcomes in the rich world on basic measures like life expectancy, infant mortality, and maternal mortality. This is because a vast collection of interest groups—pharmaceutical companies, hospital chains, insurance companies, medical device manufacturers, and so on—have made the health care system into a machine for devouring the American economy. And Medicare Advantage is one of the principal mechanisms used to pick our pockets.
So that’s Republicans for you. They’re “protecting Medicare” by defending the ability of rapacious corporations to loot the program blind. It should come as no surprise from a party whose Senate campaign arm was last led by Sen. Rick Scott (R-FL), who ran a hospital company in the 1990s that was convicted of swindling Medicare out of $1.7 billion under his leadership—at the time the biggest fraud in American history. (Scott himself was not charged.)
Don’t let conservatives distract you from the staggering inefficiency of American health care. Just existing public subsidies would be easily enough to fund a Medicare for All system—if only we paid the same prices as other rich countries. If we really wanted to defend Medicare we’d be ending the Advantage program, adding more people to the program (like children, for starters), and using the additional leverage to wrench down prices across the board.
Ryan Cooper is the Prospect’s managing editor, and author of ‘How Are You Going to Pay for That?: Smart Answers to the Dumbest Question in Politics.’ He was previously a national correspondent for The Week.
February 13, 2023
5:15 AM
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