By John Goodman
There are a group of private health plans that are ostensibly doing everything President Obama says he wants to accomplish with health reform. So what does President Obama think about these plans? He wants to get rid of them or at least cut them way back. So do many Democrats in Congress.
- These plans provide subsidized coverage to low- and moderate-income people who could otherwise not afford it.
- They control costs better than conventional insurance by eliminating unnecessary care.
- They provide higher quality care.
- They have no pre-existing condition limitations and some plans actually specialize in attracting and caring for patients with multiple illnesses.
- They provide an annual choice of plans.
They even compete against a public plan.
About one in every four seniors is enrolled in a
Medicare Advantage (MA) Plan a private alternative to conventional Medicare. These plans have primarily low- and moderate-income members seniors who have too much income to qualify for Medicaid but are generally too poor to be able to afford supplemental medigap insurance.
Without Medicare Advantage these seniors would have only the skimpy benefits that Medicare provides leaving them exposed to thousands of dollars in potential out-of-pocket costs. With Medicare Advantage they have the kind of coverage comparable to what most non-seniors have.
Special Interests Versus the Elderly
Even more bizarre is the fact that under the Houses reform bill the cuts in MA payments would be greatest for some of the most efficient plans and smallest for some of the least efficient.
For example President Obama recently asked the White House Staff to read a
New Yorker article arguing that Medicare spending was very wasteful in McAllen Texas compared to El Paso. So what does the House bill do? It makes substantial cuts to El Paso MA plans and barely cuts the McAllen plans at all.
Go figure.
An enormous amount of consternation exists over the fact that the government is paying MA plans about 13 more than what would have been spent under conventional Medicare. On the average MA plans provide approximately
$825 in added benefits annually compared to traditional Medicare.
However these extra benefits vary radically from one area to another. In places like Florida where basic Medicare apparently substantially overpays for services MA plans are able to provide substantial extras for Medicares average payment. In Minnesota by contrast Medicare payments to providers are less generous and MA plans provide fewer extra benefits.
On measures of quality and efficiency how do MA plans stack up against conventional Medicare? Quite well. According to a
study by AHIP (which represents MA insurers):
- MA enrollees had 33 more doctor visits (presumably representing more primary care) yet experienced 18 fewer hospital days and 10 fewer hospital admissions.
- More importantly MA enrollees had 27 fewer emergency room visits 13 fewer avoidable admissions and 42 fewer readmissions.
This is not to say that the MA programs could not be improved. Right now almost all the enrollees are in HMOs. Very few have a Health Savings Account plan. And there is no practical way for the chronically ill to manage their own budgets the way the Medicaid disabled can in the
Cash and Counseling pilot programs.
Still the puzzle in all this is the hostility of many Democrats toward a program that primarily benefits likely Democratic voters and their desire to take away these benefits in order to create new benefits (and undoubtedly more generous coverage) for non-seniors.
Overall Hostility Toward the Elderly
The antipathy health reformers are showing toward MA plans is part of an overall pattern.
Clearly the reformers intend to pay for increased health insurance coverage for non-seniors by taking resources away from seniors. Consider that:
- The Obama Administration has pledged to cut $156 billion (over 10 years) out of Medicare.
- It wants to cut an additional $177 billion in payments to MA plans.
- Also expansion of insurance coverage for non-seniors will almost certainly create access problems for the elderly.
On this last point consider what happened in Massachusetts the model for Obama Care.
On paper the number of uninsured were more than halved and many previously insured now have more generous coverage. But there was no increase in the supply of physicians. As a result
waiting times to see a new doctor in Boston are twice as long as they are in any other US city; and the number of people going to
emergency rooms for nonemergency care is as high today as it was three years ago.
The problem for seniors is that they are in a plan that pays doctors about 30 percent below the market rate. So as demand increases and supply problems become more severe the elderly will increasingly be pushed to the back of the waiting lines.
Already an increasing number of doctors are refusing to accept new Medicare patients.
Expect that problem to get worse.
