I don’t know it Thom Hartmann is vying for a piece of Michael Moore’s mouth-foaming progressive-esque outrage game or what, but his last story is in exactly that vein — long on pulling together emotions and writing about them intellectually but short on balanced analysis or detailed solutions. So for balance let’s lay out some facts and analysis about Medicare, Medicare Advantage, and Medicaid.
Do not confuse what I’m saying for an endorsement of the Medicare Advantage program as it is currently constructed, much less the marketing hijinks around it.
First, let’s talk scale. Medicare as a program disburses about $775B in payment each year, around 15% of the federal budget. So any of these claims of $30 BILLION *pinky in mouth* over three years, or $10B/year, need to be stacked against that figure. Not to say we should be pulling back billions in misspent public money, but for real analysis a scale is required.
Next, let’s talk about risk scoring inflation among MA carriers — it's absolutely true, and it is reprehensible. However, Thom’s article neglected to mention the CMS and DOJ have filed (Cigna, Anthem, Aetna) and won (UHC) many suits against large MA insurers, audited others (Humana) and collected many of the billions as he describes being written off.
And, while it is true that ordinary doctors and patients don’t understand Medicare risk scoring, plenty of people do. In fact, code to calculate HCC risk scores is open source! And it might be a good idea for people to be able to see their own risk score, but it might not (e.g. it could lead patients or doctors to make bad choices). If you think it’s a good idea, you should ask CMS to add it to the Medicare Blue Button program so you can download it and see it yourself, or even better, choose an app developer to help you make sense of it. I work for a non-profit app developer and I would like to see people be able to understand something about their own risk score, but I would listen carefully to arguments about how that could hurt people.
The idea that somehow risk scoring is some scheme concocted expressly to send money to big evil insurers is just plain salacious. Private insurers typically have net profit margins around 5%, far below the 35%+ for pharma/life sciences, so if you want to know where the big money is going, look downstream. And if you were interested in, say, how to make risk scoring better, you’d look at how the ACA separates risk payments into “risk adjustment” and “risk corridors” (which were shamefully and likely unlawfully stiffed by the GOP). Under the ACA risk adjustment is used to take money from insurers that have a riskier pool of patients and pay it out to other insurers that less risky patients, while risk corridors paid out to companies who were willing to issue plans to higher risk pools of patients. So if you think there are structural problems with Medicare Advantage risk scoring, by all means talk about those problems and how to fix them.
Carrying on, Original Medicare is not without its own fraud problems. Credible estimates are that some 10% of Medicare spending is in some form fraudulent ($60B/year) and there’s plenty of waste above and beyond that. Part of this is because Medicare does not adjudicate claims individually — if a provider is approved to bill for a certain service Medicare pays first and audits later. That’s problematic in terms of fraud but also in overutilization: any of you Medicare beneficiaries reading this have likely had devices, tests and other services that were of marginal utility. And guess where all that money goes when Medicare pays it out — doctors, hospitals, pharma, medtech. So maybe, just maybe, Original Medicare isn’t the alpha and the omega of universal health insurance. A balanced view would compare the scale of waste, fraud and abuse in each program and talk about how each program could be reformed to work better.
Original Medicare also has no out-of-pocket maximum, so unless you have a spare $150-$300/month to pay for Medigap or you get a screaming deal on MedSup as part of retirement, it’s not a low cost program for a lot of seniors. Medicare Advantage plans do actually provide $0 deductibles and out of pocket maximums of $5000-$10000 for no monthly premium — this is a big reason they have become popular. That tradeoff, which is absolutely misrepresented by brokers, agents, and the companies, is narrow networks and heavy-handed “utilization management”. Consumers should definitely know that up front — and I can say with great pride that I have worked and continue to work to make networks more transparent to consumers.
Utilization management is where things get interesting. You see Medicaid, which now insures more Americans than any other government program, is built on extensive utilization management — in Medicaid a large fraction of drugs and medical services require approval, while Medicare’s lack of claims adjudication makes it the exception rather than the rule. And in Medicaid there are also private insurers (called Medicaid Manage Care Organizations, or MCOs) but attacking Medicaid doesn’t have the nice anti-corporate ring that yelling about excesses and miscreancies of Medicare Advantage does. Medicaid is much more like the kind of universal healthcare that people mean when they talk about Medicare For All — no premiums or out-of-pocket costs, but less coverage of fancy, expensive services.
If you really, actually, like in real life, want the US healthcare system to cost what other countries’ systems do, you’re looking at much more utilization management. I am as strong a believer in universal healthcare for all Americans as there is (ACA & Medicaid for all!) and if we are serious about fixing American healthcare, it’s time to get realistic about the good, the bad and the ugly of all of our government insurance programs. CMS Administrator Chiquita Brooks-Lasure has put a lot of effort into hearing more from the public, so reach out. And if you think, as I do, that the benchmark rate the CMS pays Medicare Advantage plans is probably too high, tell your Congressperson or CMS that too.