Medicare Advantage plans are good business for the health insurance industry. Though only a little more than a quarter of Medicare beneficiaries buy these supplemental plans, they're big business. They're also relatively expensive for the federal government, which subsidizes them. In fact, the Government Accountability Office found that over the past three years, the federal government has overpaid insurers between $3.2 billion and $5.1 billion. That's something the Obama administration wanted to change, needing to find every cost-cutting measure possible to implement Obamacare. That's why the administration tasked the Centers for Medicare & Medicaid Services (CMS) with cutting those subsidies and why it proposed the 2.3 percent cut. The cut would have not been in benefits, but America's Health Insurance Programs (AHIP) didn't want MA enrollees to know that. So they did what every powerful industry group does: use some scare tactics and an Astroturf campaign.
Last week Katharine Raley, who heads the Ventura, CA, office of the state’s Health Insurance Advocacy and Counseling Program, got a warning call from a representative of Blue Cross. The insurance rep told Raley that an industry-backed advocacy group called the Coalition for Medicare Choices would be phoning beneficiaries in the county about a planned 2.3 percent reduction in federal payments to Medicare Advantage plans. “She was afraid beneficiaries would be nervous that the cuts would penalize them,” Raley said. [...]The result? More than 40,000 terrified seniors called their representatives. That's because AHIP was telling them that they would see their monthly premiums rise between $50 and $90. The part that AHIP left out was that they would not accept lower profits nor would they cut expenses, so customers would have to make up the difference. As a result of all those calls from terrified seniors, dozens and dozens of members of Congress called the CMS, and here we are.
The Coalition for Medicaid Choices’ campaign features ordinary seniors in slick, scary TV ads now playing around the nation, urging viewers to call their elected officials to stop the cuts. But the Coalition is not a true grassroots group. It’s a product of AHIP, which has pulled out all the stops in its effort to stop the rate adjustment, putting the Coalition’s 1.3 million members with Medicare Advantage plans to work ginning up letters, emails, and phone calls to legislators.
AHIP isn't likely to try to out-and-out kill Obamacare; they've got too good a deal out of it overall, with all the new customers they're going to gain. But that doesn't mean they'll fight back on the margins. On less prominent fights like this one, and by chipping away at the various cost-cutting reforms, they'll both ensure their continued profits and the nation's overpriced health care. That is, until we have a president and Congress who will to stand up to them and create some real competition for them. Medicare for All, anyone?