On August 11, 2021, Axios published an article by reporter Bob Herman entitled “Medicare has become more of a private marketplace — and it’s costly”. The article is available here.
Herman’s article opens as follows:
Medicare’s open enrollment will kick off in two months, leading to the health insurance industry’s annual marketing blitz that entices seniors with Medicare Advantage plans that tout capped out-of-pocket costs, vision and dental benefits, and fitness classes.
Why it matters: Medicare Advantage continued to grow during the pandemic, and it’s increasingly likely a majority of all Medicare enrollees will be in private plans in a few years despite Medicare Advantage’s deep, longstanding problems.
In the article, Herman touches on a number of important concerns relating to the Medicare Advantage (MA) program, including increased and wasteful payment to MA plans. Herman notes that the federal government paid “almost $350 billion to MA insurers” for 2021, a 10% increase from last year. “Every year since 2015” the article states, “annual spending growth on MA plans has outpaced annual enrollment growth.” This is despite the fact that “promises of saving taxpayer dollars have not panned out.” Herman quotes the Medicare Payment Advisory Commission’s (MedPAC) June 2021 report that states “No iteration of private plan contracting has yielded net aggregate savings for the Medicare program”. Herman documents how MA plans “are overcharging the government by exaggerating how sick their members are” and that the “giant pot of taxpayer funding is a big reason why venture capitalists have backed new insurers”.
In addition to noting that enrollment in MA plans is growing, and that more employers are shifting retirees into MA plans, Herman cites to the latest evidence that many people who are more sick tend to disenroll from MA plans. In June 2021, the Government Accounting Office (GAO) released a report entitled “Beneficiary Disenrollments to Fee-for-Service in Last Year of Life Increase Medicare Spending” which found that “MA beneficiaries in the last year of life disenrolled to join Medicare fee-for-service (FFS) at more than twice the rate of all other MA beneficiaries” and “disproportionate disenrollment by MA beneficiaries in the last of year life may indicate potential issues with their care.”
Herman concludes his article:
“The bottom line: Medicare Advantage is consuming more membership and more of the Medicare trust fund, but many enrollees are not sticking with their plans until the end” [emphasis in original]. After citing to the GAO report, he asks: “Why? As those people get sicker, they need more care, and their plans’ networks limit access to the doctors, hospitals, nursing homes and hospice care they want.”
It is long past time for Congress and the Department of Health and Human Services to address these Medicare Advantage problems, including wasteful spending and higher rates of disenrollment of those who are more sick. More broadly, policymakers must right the growing imbalance between the MA program and traditional Medicare.
August 12, 2021 – D. Lipschutz