President’s Forum 112 – New NRLN Whitepaper on Medicare Advantage

by Bill Kedereit

You probably know that that I have been writing whitepapers and sharing Forum and FOCUS newsletter messages about the NRLN’s concern that taxpayer subsidies paid to Medicare Advantage (MA) insurance companies are being used to move Medicare toward privatization.

I have completed a new NRLN whitepaper on this issue. Click here to access the whitepaper. I hope you will read the entire 18 pages. Tables and charts illustrate and magnify new findings. If you do not take the time to read the entire whitepaper, I urge you to at least read the 3-page Executive Summary which includes one page of the NRLN’s proposals to Congress on MA plans and original Medicare.

The NRLN’s primary concern has always been for its members and all seniors who see the TV commercials about MA plans and good deals that are “FREE.” But taxpayer dollars are subsidizing private insurance companies in the form of rebates and bonuses that fund reduced deductibles and copays, pay for drug plans and new “chronic” benefits to the 26 million MA enrollees that are denied to the 44 million original Medicare beneficiaries. The NRLN is advocating this is unfair and discriminatory.

The NRLN fully supports competition from private healthcare plans and understands the financial challenges ahead for Medicare and the federal budget. However, we lobby against legislated subsidies and restrictions placed on original Medicare Fee-for-Service (FFS) just to preserve the notion that private insurance plans are more effective. Sooner or later these subsidies could dry up, causing insurers to abandon MA plans.

I recognize that you may have an MA plan and like it. Possibly, your plan is one of the better MA-PPO plans that four million seniors have from their former employer or union. PPO plan benefits are usually not network restricted and premiums are negotiated and less dependent on rebates.

It is critical that seniors who have an MA plan and prospective new MA enrollees fully understand the 12 months rule. While MA plan participants can switch to original Medicare after 12 months, they must meet pre-existing conditions and other underwriting requirements to qualify for Medigap supplemental coverage. Rejections are common. Those who do qualify with restrictions may have to pay excessive premiums.

I want to share with you some realities in the whitepaper obtained from reliable sources such as the Medicare Payment Advisory Committee (MedPAC), the Medicare Trustees, the Health and Human Services (HHS) Inspector General and the Congressional Budget Office (CBO) who produce non-partisan reports on Medicare and MA to members of Congress and the President.

    1. Healthcare costs are rising four times faster than the number of new Medicare enrollees;
    2. After 23 years and over $350 billion in rebates paid to MA plans, their annual payments per enrollee are 103% of enrollees in original Medicare;
    3. Congress uses income (not payroll) tax dollars to pay MA insurers rebates of $122 a month per enrollee;
    4. In 2020, of the $271 billion in payments to be made to MA plans, $35 billion, or 13%, are rebate payments.

The whitepaper states that the Medicare Advantage Quality Bonus Plan (QBP) is used as a vehicle to divert federal income tax dollars to insurance companies. This 1–5-star plan awards the low 1-star rated plans a 50% rebate, a direct subsidy and a squandering of taxpayer dollars. Ridiculous!

The MedPAC has reported to Congress that QBP is unprofessionally derived and administered. The HHS Inspector General has stated that QBP provides “wrong or improper payments.” Yet Congress continues to subsidize MA plans.

I call the QBP program a HOUSE OF CARDS and the achilles heel of Medicare privatization! Please click here to read the NRLN’s whitepaper on MA. If you have a problem with this link, click on the Legislative Agenda tab at the top of this page and select NRLN whitepapers.

Bill Kadereit, President
National Retiree Legislative Network

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