Tag: "medicare advantage"
Medicare uses an elaborate risk adjustment model incorporating individual demographic characteristics and medical conditions into 70 different hierarchical condition categories in order to decide how much to pay Medicare Advantage plans for each individual enrollee. The goal is to predict each enrollee’s medical expenses as accurately as possible and to pay a premium that reflects that expectation. These models will also be used in the new ObamaCare exchanges in order to “tax” plans with healthier enrollees and subsidize those with “sicker” enrollees. Private insurers have historically set their premiums using experience rating rather than risk adjustment.
So how well does risk adjustment work? According to the June 2012 MedPAC Report, the current model is a “much better predictor of a beneficiary’s costliness” than the previous model. The previous model explained “only about 1 percent” of an individual’s costliness. The current model predicts “about 11 percent.”
This is from Julie Appleby of Kaiser Health News:
In a surprising move, the Obama administration will extend special bonus payments meant to reward top-performing Medicare Advantage insurers to those that score only average ratings…. The change means 62 percent of all Medicare Advantage insurers — representing 84 percent of enrollees — will qualify for the quality bonuses, compared with only 14 percent of plans under the health law provisions….The total cost over the three years is $1.3 billion.
“It’s only been eight days since the election,” [Barclays Capital analyst] Joshua Raskin, wrote in his report, “but the rollback of Medicare Advantage cuts got its first step forward.”
A new letter by Medicare Chief Actuary, Richard Foster, to Senate Republicans quantifies the expected losses for seniors. Those enrolled in Medicare Advantage plans will see their out-of-pocket costs rise by $346 per year in 2011, peaking at $923 in 2017.
During the debate over ObamaCare last fall, the Administration threatened health insurance companies who were informing seniors of potential losses of Medicare Advantage (MA) benefits. As far as I could tell, the mailings were completely truthful and consistent with the CBO and CMS estimates. Medicare’s Chief Actuary, for example, predicts that eventually as many as 7.4 million beneficiaries will lose their MA plan altogether and another 7.4 million will experience a loss of benefits.
This week the very same agency that gagged the insurers is sending out a propaganda pamphlet to more than 40 million Medicare beneficiaries – extolling the benefits of the new law, but ignoring all the costs (including the fact that more than half the cost of health reform is to be paid for by reduced Medicare spending). The pamphlet even claims that MA enrollees will be better off!
Republicans are outraged [gated]. CMS says it only wants to help seniors avoid confusion. But won’t the biggest confusion come when their MA plans are cancelled?
Senior citizens are by far the biggest losers in health reform. Consider that:
- More than half the cost of health reform will be paid for by $523 billion of cuts in Medicare spending over the next ten years.
- Although there are some new benefits for seniors (mainly new drug coverage), the costs exceed the benefits by a factor of more than ten to one.
- As many as 8.5 million of the 11 million seniors in Medicare Advantage (MA) plans may lose their coverage, according to Medicare’s Chief Actuary.
- Those lucky enough to retain their MA coverage will face steep cuts in benefits or hefty increases in premiums or both.
- In addition to these direct costs there are indirect costs, including new taxes on drugs and medical devices. Although these taxes don’t single out senior citizens, who do you think are the heaviest users of wheelchairs, crutches, artificial joints, pacemakers, etc.?
- To make matters worse, severe rationing problems lie ahead, as 32 million newly insured people try to double their consumption of medical care under a reform bill that produces not one new doctor or nurse or other paramedical personnel. Because many of the newly insured will be in private plans paying market rates, they will be more attractive to doctors than Medicare enrollees paying about 20% to 30% less.
So how did this happen? Aren’t senior citizens supposed to be the most powerful voting bloc? Aren’t they supposed to be represented by the all-powerful AARP?
Unfortunately for seniors (and indeed all Medicare enrollees), AARP sold out its own members. Just as the AMA sold out the doctors and the labor unions sold out their own members, AARP signed on to legislation that helps AARP but hurts the millions of people who AARP claims to represent.
- It denies access to individuals with pre-existing conditions by imposing waiting periods.
- Its plans are not subject to the same restrictions applied to all other forms of insurance under ObamaCare.
- A backroom deal cut in Sen. Harry Reid’s office exempts its plans from the new tax on health insurers.
It’s called the “AARP Insurance Plan,” a wholly owned subsidiary of AARP. It sells Medigap insurance, which will greatly expand when ObamaCare cuts subsidies for Medicare Advantage plans. AARP, over the strong objection of most seniors, supported ObamaCare.
The information above came from Chris Jacobs, a health policy analyst with the Republican Policy Committee.
Minority groups disproportionately use Medicare Advantage (MA), which is slated for a $118 billion cut. One in four MA enrollees is Hispanic/Latino; one in four is African American. Also, more than 80% of Hispanic/Latino Medicare-eligible seniors with incomes of less than $20,000 per year are enrolled in an MA plan.
Individual and employer mandates will disproportionately negatively impact low income, at risk populations. A June 2008 study, put out by the Blue Cross Blue Shield Massachusetts Foundation and Harvard School of Public Health, found that 50% of those impacted by the mandate (meaning they were uninsured in the 12 months prior to the survey at some point) believe people are worse off than they were prior to the reforms.
The employer responsibility component of the bill is fairly complicated, but contains significant disincentives for employers to hire low income workers. The Center on Budget and Policy Priorities (a liberal group) finds that “significant disincentives to hire or retain [workers from low- or moderate-income families] remain” in the bill.
The above is adapted from a report by The San Diego Union-Tribune.
As Linda Gorman has previously discussed, if the real point of a so-called “public option” was simply to supply fair competition against private insurers, the government would allow patients dependent on VA, Medicaid, and Medicare to take their entitlements as vouchers and get private insurance. In fact, the opposite is happening: All the reform proposals before Congress would significantly reduce seniors’ choice of benefits in Medicare. Cutting back payments to Medicare Advantage by as much as $172 billion over the next decade will cause millions of seniors to lose their coverage.
Medicare Advantage is an important alternative to traditional Medicare, which operates as a government monopoly. Seniors can choose among various plans provided by private health plans and select one that best suits their needs. In order to participate in the program, insurers submit bids to the government for the right to offer policies and are paid according to a regional formula. Roughly one out of every four Medicare beneficiaries is in Medicare Advantage.
NPR fact checks Medicare Advantage cuts discussed by McConnell: Ignores CMS, CBO and other estimates of harm to the elderly.
SEIU discovers free market health care abroad: Can’t understand why we don’t have it in this country.