All eyes turned to Medicare Advantage today as Republicans on the Senate Finance Committee tried to preserve the 14% overpayments the government pays private insurers that participating in the program. Reacting to the Center for Medicare and Medicaid Services’ recent investigation into Humana’s efforts to rally its beneficiaries against health reforms that would eliminate the overpayments, Sen. Jon Kyl (R-AZ) “offered an amendment seeking to protect the First Amendment rights of private insurers who might want to criticize the proposed health care legislation.”
Sen. Pat Roberts (R-KS) — who earlier today argued that senators needed more time to consult with health insurance lobbyists — strongly defended the health industry’s right to lobby Congress and the public against policies that jeopardized its profits. “Think of what your CEO is going to do,” Roberts said, speaking directly to the health insurers:
Think of what your CEO is gonna to do. Sitting around with the board of directors and he takes a look or she takes a look at this bill and says, ‘we think that this is not legitimate, we think that this is a bad situation that will really harm our patients, and our customers, not to mention our company….We don’t feel free to contact Sen. Roberts or Sen. Kyl or for that matter Sen. Schumer…I mean this is clearly a chilling affect on the entire health care industry…This is, quite frankly, it smells like tough, hardball Chicago politics abridging the First Amendment.
As government contractors, however, private insurers participating in the Medicare Advantage program are explicitly forbidden from directly contacting Medicare beneficiaries. In fact, before joining Medicare Advantage, Humana signed a data use agreement that prohibited the company from distributing communications that were not approved by the Center for Medicare and Medicaid Services. The intent of the law is to protect seniors from receiving misleading information from companies that have a financial stake in the final outcome of the legislation.
The Humana debate was only part of a larger Republican effort to preserve the government’s overpayments to insurers. Under the current system, private insurers receive approximately 14% more to provide the same services as traditional Medicare, but there is little evidence that private insurers are reinvesting that subsidy into better benefits or higher quality coverage. In fact, a number of government reports and independent estimates have concluded that the extra federal dollars don’t improve health outcomes. They pad insurers’ bottom lines, raise costs for beneficiaries in the traditional Medicare program, squeeze both Medicare and the federal budget, and drain resources from more productive uses. Private fee-for-service Medicare Advantage plans have even exposed beneficiaries to serious financial risks.
The health reform bill before the Senate Finance Committee would open most Medicare Advantage plans to competitive bidding, requiring the private plans to compete on an equal playing field with Medicare. While certain Medicare Advantage plans would keep their subsidies (Sen. Bill Nelson (D-FL) amended the bill to preserves Medicare Advantage subsidies for seniors living in high cost areas where plans deliver benefits below the average cost of traditional Medicare), the committee would replace the current subsidy with a competitive bidding process. Insurers in each geographical area would bid to provide coverage, the government would average all of the bids, weigh that by the enrollment in the previous year, and pay out that amount.
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