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President’s Forum No. 151 | Authors Conclude Medicare Advantage Should be Abolished

NRLN President’s Forum 
By Bill Kadereit

An analysis in the JAMA (Journal of the American Medical Association) Internal Medicine on June 10 concluded: “We think the time has come to declare MA [Medicare Advantage] a failed experiment and abolish it. That would allow redeploying the $88 billion taxpayers will overpay MA this year to upgrade benefits for all Medicare beneficiaries.”

The conclusion was based on the high cost of MA compared to traditional Medicare. For example:

Medicare Payment Advisory Commission (MedPAC), the nonpartisan agency reporting to Congress, recently estimated that MA overpayments added $82 billion to taxpayers’ costs for Medicare in 2023 and $612 billion between 2007 and 2024. Two insurer strategies drive MA overpayments: diagnosis upcoding and avoiding enrollees who are ill and do not contribute to profits.

Although MA insurers must accept all applicants in counties where they offer a plan, they are also free to withdraw from counties where they are accumulating unprofitable enrollees.

Only 2% of Fee-for-Service (FFS) Medicare expenditures go for overhead. But MA insurers incur extra expenses for television advertisements, health care network management, benefit design, executive salaries, health care utilization review, prior authorization, and shareholder profits, driving their overhead up to 14%. 

This is according to a report from Milliman, an international actuarial and consulting firm, on MA financial results for 2022. Milliman estimates applied to subsequent years’ payments, MA overhead for 2007 to 2024 totals $592 billion—equivalent to 97% of taxpayers’ $612 billion overpayments to them during that period.

The authors closed their analysis stating, “A smarter, thriftier way to expand benefits and lower out-of-pocket costs is possible for all Medicare beneficiaries, but first, we must eliminate MA and double down on traditional Medicare, covering all enrollees in an expanded and improved Medicare program. That would be a good deal for patients and taxpayers.”

 

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MEDICARE AND YOU HANDBOOK 2023

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SMI Trust Funds Medicare Part B and D

The Medicare Trustees’ 2024 report noted, the Supplemental Medical Insurance (SMI) Trust Fund is adequately financed into the indefinite future because, unlike the other trust funds, its main financing sources — enrolled beneficiary premiums and the federal contributions from the Treasury — are automatically adjusted each year to cover costs for the upcoming year. Although the financing is assured, the rapidly rising SMI costs have been placing steadily increasing demands on beneficiaries and taxpayers.

The SMI Trust Fund provides the funding Medicare Part B and D. Part B, which covers physician visits, outpatient services, preventive services, and some home health visits, is financed primarily through a combination of general revenues (71% in 2023) and beneficiary premiums (27%) (and 1% from interest and other sources). Beneficiaries with annual incomes over $103,000 per individual or $206,000 per couple pay a higher, income-related Part B premium reflecting a larger share of total Part B spending, ranging from 35% to 85%. 

Welcome to the latest NRLN Chapter Highlights! Across the country, our chapters are actively advocating for retirees’ rights and well-being. This edition showcases our members’ recent efforts, from engaging policymakers to hosting educational events. Discover how our community is making a difference for retirees nationwide!

THE PRESIDENT'S LETTERS TO WASHINGTON ON BEHALF OF RETIREES

At the National Retiree Legislative Network (NRLN), we champion the rights of America’s retirees. NRLN President Bill Kadereit wrote to members of Congress, urging them to address essential changes in health care policies for seniors.

His letters highlight the urgent need for reforms to ensure seniors receive the health care they deserve. Visit our Letters to Washington section to see how we’re advocating for retirees and learn how you can support our efforts.

S.3109, Alleviating Barriers for Caregivers (ABC) Act

NRLN Has Long Advocated Medicare Out-of-Pocket Cost Cap and Medicare Buy-In

The Choose Medicare Act (H.R.8207 and S.4231) was introduced on June 1. If enacted the legislation would cap Medicare enrollees’ out-of-pocket costs at $6,700 per year starting in 2026. The bill would also create a Medicare Part E plan open to people of any age.

On February 1, 2017, the NRLN published a whitepaper: Medicare Out-of-Pocket Health Cost Limits – The Unfinished Business of Protecting Medicare Beneficiaries from Catastrophic Health Care Costs. The NRLN noted that “one of the landmark achievements of the Patient Protection and Affordable Care Act of 2010 is that it prohibits insurance plans from imposing any annual or lifetime limits on the dollar value of covered benefits. The legislation also caps the mount individuals and families must pay out of their own pocket each year, setting an out-of-pocket limit that varies by income. Unfortunately, the protection against ruinous health costs that Congress will guarantee as a right to nearly all Americans under the age of 65, Congress denies  those over age 65 who are most vulnerable: senior citizens.”

Congress’ own commission, MedPAC, produced a report and charts in 2020 showing members of Congress that 25% of the Fee-for-Service (FFS) beneficiaries over age 65 account for 85% of Medicare spending. The MedPAC report states that “Costly beneficiaries tend to be those who have multiple chronic conditions, are using inpatient hospital services, are dually eligible for Medicare and Medicaid, and are in the last year of life.” 

We advocated in our 2017 whitepaper, “Now that national health reform legislation has established the principle that no American should be forced into bankruptcy or onto the public dole to pay catastrophic medical bills, Congress should ensure that this protection is extended equitably to the 65-and-older population as well.”  

The Choose Medicare Act also requires the Secretary of Health and Human Services to “establish public health plans (to be known as ‘Medicare part E plans’) that are available in the individual market, small group market, and large group market.”

The NRLN produced a whitepaper, also dating back to 2017, with the title: Health Care Access for Older Adults The Urgent Need for a Medicare Buy-In Option. In contract to the Choose Medicare Act, the NRLN’s proposal would provide a Medicare Buy-In at a reasonable cost for Americans ages 55 to 64 who had lost their healthcare coverage because they had been laid off, forced into early retirement or because their employer canceled coverage. The Medicare buy-in would also be available to these older citizens who are denied coverage, or lack affordable coverage, or because they are self-employed, underemployed or work at small firms not offering group health coverage.

The NRLN believes its Medicare Buy-In proposal makes more sense than the Plan E in the Choose Medicare Act which would open up Medicare enrollment to “any individual who is a resident of the United States, as determined by the [HHS] Secretary under subparagraph….” Those under age 65 are covered by individual small and large company plans and the Affordable Care Act (ACA). Congress should eliminate unearned private plan rebates and focus on the real problems, provider industry cost of healthcare and applied research focused on cures. 

Medicare Plan E could be offered with an annual premium consisting of the FFS incurred cost plus 2% to cover Medicare overhead. Annual plan premiums would be less costly than private Medigap plans, taxpayers would pay nothing, and Congress could set special rates for those needing special assistance. 

NRLN Members Experienced Social Security Overpayment Clawback

Twenty-three NRLN members know that Social Security overpayment clawback can happen to anyone – because it happened to them. 

On March 11, 2024, the NRLN sent an email to all members requesting that anyone who has had to payback money to Social Security participate in the NRLN’s brief survey. The purpose of the survey was to support the NRLN’s efforts to change the Social Security Administration’s (SSA) regulation on overpayment clawback.

The NRLN sent letters to Congressional leaders in December and the new Social Security Commissioner Martin O’Malley earlier this month proposing that the existing SSA overpayments be waived when it was SSA’s fault and the current Social Security Code of Federal Regulations be replaced with statutory language similar to the NRLN’s proposal on pension recoupment that was enacted in the SECURE 2.0 Act of 2022.
 
Since passage of SECURE 2.0, a company doesn’t have a fiduciary obligation to recoup; but if it does recoup it must be done within three years of initial overpayment and may not recoup more than 10% of the overpayment per year. 

In a statement issued March 20, Commissioner O’Malley said the agency would cease “the heavy-handed practice of intercepting 100% of an overpaid beneficiary’s monthly Social Security benefit” if they failed to respond to a demand for repayment. Instead, he added, the agency will limit the clawback to 10% of an overpaid beneficiary’s monthly benefit. Additionally, the SSA will extend repayment plans to 60 months, up from its prior limit of 36 months, giving recipients an additional two years to repay the money. 

The NRLN applauds Commissioner O’Malley’s actions. We will continue to advocate for the parts of our proposal not yet adopted by SSA.

I want to thank the 23 NRLN members who participated in our survey. Their responses provided valuable information into SSA’s handling of recovery of overpayment which in each of our members’ cases was through no fault of their own. 

This was a quick survey but the input is very useful. If others want to add to the pile, go to: https://www.surveymonkey.com/r/SSAQ 

Bill Kadereit, President
National Retiree Legislative Network

Click button below for insights into what NRLN members experienced.

Bill Kadereit Quoted in Article on IBM Retiree’s Lawsuit

Bill Kadereit, President, NRLN

A November 19, 2023 article in The Register reported that George Adomavicius, who worked for IBM for 42 years before retiring in October 2020, has personally filed a lawsuit against his former employer claiming its recent healthcare benefit changes represents age discrimination.

Adomavicius chose to sue on his own rather than hiring an expensive lawyer, “To correct a wrong.” 

The alleged wrong is the employee benefits transition that IBM announced on September 14, 2022. The corporation shifted medical coverage for Medicare-eligible IBM retirees to a new IBM-sponsored Medicare Advantage program run by UnitedHealthcare, as of January 1, 2023.

As The Register previously reported, IBM’s health benefits transition angered some retirees because it withheld Health Reimbursement Arrangement/Account (HRA) subsidies – credited to retirees during their time at the company – from anyone who refused to select one of the two new Medicare Advantage plans and preferred to retain their traditional Medicare supplement plan.

Steve Bergeron, another former IBM employee, started a petition to convince the company to let retirees choose their healthcare plans without forcing the issue by denying HRA funds. He managed to collect more than 3,500 signatures though ultimately gave up, according to The Register article.

NRLN President Bill Kadereit told The Register that the NRLN has been involved in a similar health benefits transition with Tennessee Valley Authority retirees. After trying to convince the State of Tennessee and the Centers for Medicare and Medicaid Services (CMS), which administers Medicare, to intervene, the NRLN is seeking a statutory remedy with Congress.

The article reported that Kadereit argued this state of affairs is being allowed to happen by Congress to avoid tough decisions about how to deal with spiraling healthcare costs. And business accounts departments like it because there’s profit to be made.

“What Congress was trying to do is privatize Medicare. And the way they do that is to subsidize the insurance companies to put them in a market advantage, thus cannibalizing their own plan Medicare.

“And now Medicare Advantage plans have a 54 percent market share and their incurred cost per enrollee is nine percent higher than the old fee for service costs. So what Congress is doing is avoiding having to talk about taxes because it affects electability.”

Click here to read the article in The Register. 

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NRLN Grassroots Network is the name for having support from NRLN members to respond to Action Alerts plus having Region, State and Congressional District leaders to support the NRLN’s Washington, D.C. lobbying efforts.

In the News

The articles and opinion pieces below are for information and are not necessarily a reflection of the NRLN’s position on issues.

The NRLN is nonpartisan and its positions on retirement issues are presented in its Legislative Agenda and white papers that can be accessed from under the Legislative Agenda tab on the website main menu.

Opinion: Privatization is taking over Medicare – and it cost taxpayers an extra $61 billion last year. By Brett Arends, MarketWatch – July 13, 2024

Young Workers Fear They Will Never See a Cent From Social Security By Joe Pinsker, The Wall Street Journal – July 13, 2024

No, Project 2025 doesn’t mention eliminating Social Security and disability benefits By Kwasi Gyamfi Asiedu, PolitiFacts – July 12, 2024

This is not a scam: Social Security needs you to update your account By Brett Arends, MarketWatch – July 12, 2024

Trump isn’t leaving himself many options to save Social Security By Tami Luhby, CNN, July 122, 2024

PBMs and Big Pharma Play Blame Game for Inflated Prescription Drug Prices By Greg Slabodkin, BioSpace – July 24, 2024

KFF: Five States with Toughest Nursing Home Staffing Rules Fail to Improve Care Quality  By Zahida Siddiqi, Skilled Nursing News  – July 12, 2024

CMS Proposes 2.8% Cut to Medicare Physician Fees for 2025 By Joyce Frieden, Medpage Today – July 11, 2024

Casey bill would expand Medicare cap on out-of-pocket drug costs to commercial health care plans By Joyce Lyons, Pennsylvania Capitol Star – July 12, 2024

Project 2025’s plan to upend Medicare should set off alarm bells John Whitehouse, Media Matters for America – July 11, 2024

Medicare Advantage increasingly the lynchpin in hospital-payer fights By Jakob Emerson, Hospital CFO Report – July 11, 2024

Opinion: Why has Medicare’s Innovation Center failed? By Chris Pope, The Hill Newspaper – July 11, 2024 

What will the presidential election mean for Social Security? Andy Biggs, Washington Examiner – July 11, 2024 

32% of US hospitals hired international nurses in 2022: KFF By Erica Carbajal, Becker’s – July 11, 2024

How Can Congress Solve the Medical Debt Crisis in America?  By Pearl Steinzor, AJMC – July 11, 2024

Donald Trump Makes Fresh Pledge on Social Security, Medicare By Aliss Higham, Newsweek – July 10, 2024

‘Less and Less Reimbursement’: CMS Proposes More Part B Medicare Cuts  By Amy Stulick, Skilled Nursing News – July 10, 2024

Americans agree that something must be done to save Social Security: survey By Nora Colomer, Fox Business News – July 10, 2024

CMS launches model aimed at improving dementia care American Hospital Association – July 9, 2024

Republicans Confirm Their Plan To Let Social Security Go Insolvent By Eric Boehm, Reason – July 9, 2-24

Over 100,000 People Removed from Social Security By Aliss Higham, Newsweek – July 9, 2024

Prescription-drug middlemen face more pressure from FTC in new report By Eleanor Laise, MarketWatch – July 9, 2024

Insurers Pocketed $50 Billion From Medicare for Diseases No Doctor Treated The Wall Street Journal – July 8, 2024

Opinion: Medicare Advantage has many restrictions, and patients struggle when they must switch doctors By Dr. Monica Maalouf, Chicago Sun Times – July 8, 2024

Trump’s new platform pledges to ‘end inflation’ and maintain the retirement age to receive Social Security and Medicare benefits By Ayelet Sheffey, Business Insider – July 8, 2024

With Boehringer ruling, industry extends legal losing streak against Medicare price negotiations  By Eric Sagonowsky, Fierce Pharma – July 8, 2024

Medicare Advantage linked to fattest gross profits in insurance: report Seeking Alpha – July 6, 2024

Opinion: Social Security is in worse shape than it looks By Senator Bill Cassidy (LA), Washington Examiner – July 5, 2024

Opinion: A journey through time: The history of Social Security By Suzan DeCamp, Nebraska Examiner – July 5, 2024

Medicare Rebate Becomes Available for 750,000 Americans By Suzanne Blake, Newsweek – July 3, 2024

No, undocumented immigrants aren’t eligible for Social Security and Medicare By Megan Lee, ABC News – July 3, 2024

Mayo Clinic to use drones to deliver prescription drugs to patients’ homes By Sean Baker, Star Tribune – July 3, 2024

Medicare explores a new way to support caregivers of dementia patients From NPR – July 4, 2024

Does Social Security increase the national debt? It depends on how you define “debt.” MARKETPLACE – July 4, 2024

Baby boomers living on $1,000 a month in Social Security share their retirement experience: ‘I never imagined being in this position.’By Allison Kelly, Business Insider – July 2, 2024

Opinion: President Biden: Novo Nordisk, Eli Lilly must stop ripping off Americans with high drug pricesBy President Joe  Biden and Senator Bernie Sanders, USA TODAY – July 2, 2024

Biden and Sanders working on legislation to expand drug price negotiation By Gabrielle M. Etzel, Washington Examiner – July 2, 2024

Medicare Rebate for 64 Medications to Start Rolling Out: Here’s What to Know By Jessica Rendall, CNET – July 1, 2024

Medicare Advantage prior authorizations can delay healthcare for seniors. A bipartisan group of lawmakers is trying to streamline care. By Jessica Hall, MarketWatch – July 1, 2024

Want to Switch From Medicare Advantage to Medigap? Avoid These Mistakes By Jessica Walrack, Investopedia – July 1, 2024

Medicare Dis-Advantage: Overpayments and Inequity The Nation – July 1, 2024

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