A Suggestion for Doge

Easy Money in Medicare Advantage

If Elon Musk is serious about finding things to cut in our bloated and corrupt federal government, one easy place to look is Medicare Advantage, also known as Medicare Part C,which allows beneficiaries to receive their Medicare benefits through private health insurance plans rather than through Original Medicare (Parts A and B). These plans typically offer all Medicare Part A and Part B benefits, can also provide prescription drug coverage, and sometimes even include extra benefits such as dental, vision, and hearing services. So aren’t they a wonderful innovation? Ummm..no. Don’t forget the profit motive.

Medicare Advantage was established in 1997 as Medicare+Choice. It was supposed to save Medicare money and provide consumers options for their care. Now, almost thirty years later, it turns out Medicare Advantage makes money both by denying patient choice and even denying treatment — while increasing profits to the insurance companies who participate.(UnitedHealthcare, Aetna, Blue Cross Blue Shield, Cigna, and Alignment Health). Have you heard of prior authorization in the insurance plans provided by employers? It’s the same in Medicare Advantage plans.It doesn’t exist in original Medicare.

But because of their hard core marketing plans, a full 55% of Medicare participants now have Medicare Advantage.

Which is ok as long as you remain healthy. But as we age, we often don’t.

Here’s a quick summary of the disadvantages of Medicare Advantage. And I didn’t make these up; they come from the National Council on Aging.

Limited Provider Networks:

Medicare Advantage plans typically have smaller provider networks than traditional Medicare, which can limit your choice of doctors and hospitals.

Out-of-Network Costs:

If you see a provider outside of the plan’s network, you may have to pay significantly higher out-of-pocket costs.

Higher Premiums:

Medicare Advantage plans generally have higher monthly premiums than traditional Medicare.

Prior Authorization Requirements:

Some Medicare Advantage plans require prior authorization for certain medical services, which can delay treatment and create administrative hassles.

Unpredictable Changes in Benefits:

Medicare Advantage plans can change their benefits, such as provider networks, coverage, and prescription drug formularies, year to year.

Difficulty Switching Plans:If you want to switch from a Medicare Advantage plan back to traditional Medicare, there are restrictions on when you can do so.

Geographic Restrictions:

Some Medicare Advantage plans are only available in certain geographic areas.

Increased Risk for Higher Costs:

If you have chronic health conditions or are likely to need expensive medical services, Medicare Advantage plans may not be the best option for you.

Limited Extra Benefits:

While Medicare Advantage plans offer additional benefits, such as vision, dental, and hearing coverage, these benefits may not always be comprehensive or meet your individual needs.

Complaints and Disputes:

There have been reports of complaints and disputes with Medicare Advantage plans, such as denials of coverage and slow processing of claims.

You may hate the government, but it pays its bills, including those to doctors and hospitals. Since private insurance is not mandated to pay in 30 days, private insurance companies often balance their books on the backs of their providers. When that happens, significant groups of providers may opt to leave the network. Suddenly your doctor is gone.

How does Medicare Advantage make money? One way is by convincing Medicare that its patients are sicker than they actually are. This is called “upcoding.”

Exaggerating Health Problems: Insurance companies get paid more for sicker patients. Many companies are finding ways to make their patients look sicker on paper than they really are — claiming more health conditions than would normally be recorded in Original Medicare.

Weak Oversight: The government agency in charge (CMS) struggles to effectively check whether these health condition claims are accurate and has trouble getting money back when companies are overpaid.

The upshot is that Medicare Advantage Does Not Save Medicare Money. In fact government studies show Medicare pays about 6% more for people in Medicare Advantage than it would cost to care for those same people in regular Medicare. This extra money adds up to billions of dollars.

Elon, go for it! Pull the plug on Medicare Advantage and only offer Original Medicare. Or ask an expert.

I have a friend who has been a health journalist for decades, and has written books about all this. His Substack, GoozNews, is where he reports now that he is retired. This is his conclusion.

While Medicare Advantage offers valuable benefits to millions of beneficiaries, legitimate concerns exist about its impact on Medicare’s finances. By implementing targeted reforms to payment methodologies, risk adjustment mechanisms, and transparency requirements, policymakers can preserve the positive aspects of MA while ensuring it doesn’t undermine Medicare’s long-term sustainability.

The goal should be a system where private plans compete on quality and efficiency rather than coding intensity or risk selection — ultimately serving beneficiaries while being responsible stewards of public resources.

“The most costly boondoggle in health care is never mentioned in the House Budget Committee report. The CBO estimates that Medicare could generate substantial savings if it simply paid private insurers covering Medicare Advantage (MA) beneficiaries the same amount as if they had remained in traditional fee-for-service Medicare.

As I’ve reported here many times, Medicare pays insurers a risk-adjusted monthly premium to cover seniors who choose an MA plan. The “risk” is determined by how sick people are, which insurers can game by coding for illnesses they never treat. The Medicare Payment Advisory Commission estimates Medicare loses over $80 billion a year from insurer upcoding — and that’s after slapping an across-the-board 5.9% reduction in payments to insurers.

Increase that reduction to 20% and it would save Medicare $1.0 trillion over the next decade — more than any other option identified by CBO. Of course, this would result in higher cost sharing, higher premiums and fewer supplemental benefits for MA enrollees (so those plans looked more like traditional Medicare) or it would reduce profits for MA insurers.”