The Editorial Board of the Wall Street Journal recently published an op-ed titled “Biden Shrinks Medicare Advantage” (April 14, 2024) with a sub-heading stating: “The feds cut payments to the private health plans so seniors flee.” The op-ed gushes about the Medicare Advantage (MA) program, stating that “[t]hese plans have been increasing in popularity, especially among lower-income Americans, because they offer additional benefits such as dental and vision care.” While admitting that “insurers sometimes put up bureaucratic hurdles to covering needed treatments and procedures” it goes on to say that such hurdles “also prevent unnecessary care, which is rife in traditional Medicare.” They continue: “Insurers also do a better job of coordinating care and keeping patients out of the hospital. If seniors disliked the program, it wouldn’t be growing.”
In an op-ed full of misrepresentations, the most glaring fallacy is an omission – a big one:
What Overpayments?
While offering effusive praise for the MA program, the op-ed utterly fails to acknowledge the one overarching dynamic fostering MA “popularity” and growth – that MA plans are significantly overpaid in relation to traditional Medicare. Through such overpayments MA plans are able to offer extra benefits, which entice more people to enroll, leading to continued growth in the program. The Board also fails to acknowledge that enrollment in MA is often required of retirees, and, is a one-way street for many, given that the vast majority of states do not require Medigap issuers to sell policies to people outside of limited time-frames. By ignoring MA overpayments, the op-ed can also ignore the fact that these higher payments to MA plans result in about $13 billion in additional Part B premiums paid by all Medicare beneficiaries this year, including those not enrolled in MA plans.
In order to consult actual facts, the Editorial Board need not have looked further than an article in another Dow Jones publication, MarketWatch, titled “Medicare Advantage is overbilling Medicare by 22%” by Brett Arends (March 26, 2024). Citing to the Medicare Payment Advisory Commission’s (MedPAC) March 2024 report, Arends states:
In other words: The private insurers who now run more than half of all Medicare plans are overcharging the taxpayers by a staggering $83 billion a year. They are charging us taxpayers 22% more than it would cost us to provide the same health insurance to seniors directly, if we just cut out the private insurance companies as middlemen.
And that’s not because the people in Medicare Advantage are sicker and therefore should cost more anyway. MedPac says this 22% estimate is after accounting for “favorable selection” and “coding intensity” — technical Medicare terms that mean, in effect, who’s sicker.
It’s a rip-off, pure and simple. And that figure, $83 billion, is staggering.
To put it in context, that is nearly 10% of the entire Medicare budget.
It’s more than twice as much as it would cost simply to provide free dental, hearing and vision care to all traditional Medicare beneficiaries, not just those in private “Medicare Advantage” plans [emphasis added].
In offering well-deserved praise for Arends’ MarketWatch article in a Health Care Uncovered post titled “The Press Is Beginning to Take Notice of How Health Insurers Are Raiding The Medicare Trust Fund” (April 30, 2024), journalist Trudy Lieberman states that “The media’s role in revealing and dissecting those overpayments is long overdue.” Unfortunately, the WSJ Editorial Board has not yet caught up.
WSJ Editorial Board Ignores MA Overpayments to Falsely Accuse Biden Administration of “Cutting MA”
Completely side-stepping MA overpayments is necessary for the Editorial Board to project its narrative that the Biden Administration is “trying to limit the program’s growth by squeezing insurers.”
In fact, since taking office in 2021, the Biden Administration has continued to increase MA payment annually. For 2022, CMS finalized a 4.08% rate increase (see CMS press release) For 2023, CMS finalized an 8.5% rate hike for MA plans (see CMS press release). For 2024, CMS issued a final payment notice that included a 3.32% payment increase – more than initially proposed (see CMA Alert, April 6, 2023). For 2025, CMS recently finalized an overall pay increase of 3.7% – an increase of $16 billion (see CMA Alert, April 4. 2024). In addition, enrollment in MA has continued to grow; according to KFF, MA enrollment was at 46% in 2021 when President Biden took office, and is at 54% now in 2024. These trends do not convey an attempt to force Medicare beneficiaries to “flee” MA plans.
In a Health Care Uncovered post titled “Senator, Saying It Doesn’t Make It True” (April 19, 2024) Wendell Potter highlights how these same fallacies are perpetuated on Capitol Hill:
During a Senate Appropriations Committee hearing on President Biden’s proposed budget Wednesday, [Senator] Kennedy tried to get Health and Human Services Secretary Xavier Becerra to say the Biden administration had cut payments to health insurers that sell private Medicare replacement plans marketed as Medicare Advantage. It isn’t true, but two big industry PR and lobbying groups–AHIP and the Better Medicare Alliance–have characterized the recently announced rate increase for MA plans next year as a cut. It’s just not as much of an increase as the industry had hoped.
Conclusion
A full disclosure of the scope of payments to Medicare Advantage plans – including overpayments due to upcoding and favorable selection – must be part of any meaningful analysis of the MA program. Wall Street Journal readers, and the public at large, deserve to know the full story.
May 5, 2024 – D. Lipschutz