A Murder Mystery: Who Killed Medicare Advantage?

“It was a cold and snowy night in December 2008, when the insurance company Executive Officer sat alone in his brightly lit office suite. He himself was all a glow with warm fuzzy feelings as he composed a memo to his staff advising them of his planned absences from corporate headquarters over the next several months. None other than the President-elect of the United States had personally called and invited him to Washington DC to help design a new health care reform policy. Yes, he’d be spending a lot of time in his new office at the nation’s capitol—several days or weeks a month. Of course, he would be one of several other CEOs from the largest health insurance corporations in the nation also working on the reform plan. But tonight, he needed to compose a staff memorandum stressing the importance of his role in advising the new President during these times of economic instability. A brief memo that would assure his staff, yet impress them with the significance of his mission on behalf of their corporation and the entire insurance industry.” Fiction or Fact??

Listening to the President predict the threatening consequences citizens and corporations alike will suffer if Congress failed to pass his health reform bill, my Swedish grandmother would have simply chuckled and called him a “cheerful liar.” That was her light-hearted response to a wide-range of what she recognized as comical attempts to excuse or blame others for the inevitable outcome of one’s own self-interested and manipulative behavior. The label applied to her grandchildren and politicians alike. I don’t have her sweet sense of humor. And, unfortunately, I was driving down a busy street listening to the car radio on a rainy December night in 2009, when I heard Obama’s stern warning “If we don't get this done, your premiums are guaranteed to go up.” My immediate response was short of “road rage”, but definitely more heated than grandma’s would have been. I was yelling: “Going to go up!? You know damn well the deal was made months ago to raise my monthly premiums over 50%!!”

The President’s artful pretense at grave sincerity is all the more infuriating because of his obvious success at conning those liberals who want desperately to believe he is “The Change we have been waiting for.” With all the evidence before them--months of presidential and congressional assurances that the health insurance makeover would be “deficit neutral,” thanks in large part to an unquestioned, undebatable $500 billion cut in funding for “wasteful” Medicare Advantage programs; plus the fact that low-income seniors had already received in November 2009 notice of increases in their 2010 Medicare Advantage plan premiums as high as 52%—progressive organizations supposedly dedicated to advocating for seniors and single-payer, cannot believe that their Obamessiah could have possibly double-crossed them. Attempts to engage these indefatigable cheerleaders in rational conversation about the already implemented detrimental “facts on the ground” are, in my experience, useless. Their cheerfully defensive replies are naively similar: “The bill hasn’t even been finalized or passed. How do you know that the 52% increase in your premium has anything to do with reforms that won’t even go into effect until 2013?” This, together with enthusiastic invitations to join them in fighting for Single-Payer and Medicare-For-All—“We’ll never give up!”—make one wonder how they avoid dealing with daily reality. (See “Progressives Abet Obama-Fraud” www.counterpunch.org/cramer08182009.html and “The Skinning of Seniors: Who Gives A Damn” www.openmediaboston.org/node/1044)

It never fails to frustrate and amaze me how belief systems can wipe out any rational or material evidence to the contrary. Barack has brought us “HOPE.” And damn it, we are not going to let go of “HOPE” no matter what! Barack says the $500 billion decrease in federal funding to Medicare Advantage plans is only to cut “waste” and “fraud.” So the fact that the Report to Congress: Medicare Payment Policy (March 2009) states repeatedly that Medicare Advantage HMOs provide higher quality services more efficiently, and at lower cost than Original FFS Medicare can (and less expensively than Fee-For-Service Medicare could even if it provided the much more comprehensive services of a Medicare Advantage HMO) means nothing to those with “HOPE.” (http://www.medpac.gov/chapters/Mar09_Ch03.pdf)

Barack says that Medicare Advantage costs the government 14% more than services under Original FFS Medicare. So, even if the Report to Congress makes it clear that it is not the efficient Medicare Advantage HMO, but the other three more expensive Medicare Advantage plans (PPFS, PPO, SNF), that account for the 14% higher cost, let’s stick it to the low-income elderly on Medicare Advantage HMO plans. (HMOs are traditional health maintenance organizations; PPFS are private fee-for-service plans like traditional Medicare allowing one to see any physician who accepts the plan; PPOs are loosely structured preferred provider organizations; SNPs are special needs plans serving those eligible for Medicaid, who are institutionalized or have severe chronic, disabling conditions.)

While Medicare Advantage providers are already raising their HMO monthly premiums, drug charges, and co-payments through the roof, many of them are also closing down the more costly PPFS and PPO plans (the “14%” overcharge sinners), leaving seniors enrolled in those programs scrambling to find a new source of insurance, or to enroll in the hugely inadequate Original Medicare before the December 31, 2009 enrollment deadline. Of course, none of this was preplanned or could have been foreseen.

What is missing in the ideology of Hope, is any understanding, it seems, of how private enterprise works. Even if a large corporation thought it might be faced with enormous loses in income within a couple of years, they would not wait until doomsday to take strong measures to insure their ongoing profitability. Yes, cut costs and increase prices of essential “products” whenever/wherever possible, ASAP. However, the politics behind the economic decisions in this case are not so textbook clean and practical. In spite of the fact that those of faith cannot believe their Man of Change could have been involved in any backroom horse trading, there is plenty of proof that that is the case. For those of us who have just been notified of unanticipated and outrageous increases in 2010 premium, drug and co-pay costs, it seems obvious that short-term losses on Medicare Advantage plans--in exchange for enormous profits guaranteed by mandated private health insurance purchases for every citizen—were agreed to before a health insurance reform bill had been debated or passed. However, if any of the leadership of those progressive organizations purporting to advocate for seniors were interested in obtaining more evidence of that fact, it is easily available.

They could begin by simply calling the Customer Service Department of their personal Medicare Advantage HMO and ask them why premiums have shot up overnight, along with the big increases in the cost of drugs, and additional co-pays. I have noticed that the leadership of these organizations tend to appear too young and/or too affluent to be on a Medicare Advantage HMO plan, but they could have one of their legitimate elderly, low-income members call their Medicare Advantage HMO plan. When I did that, I was able to obtain quite a lot of information.

Some of that readily available information might cause even a true believer to think about what deals had already been made, and what is really being “debated” in Congress. For example, when I made a call to a Medicare Advantage HMO Customer Service Department, I was informed that the CEO had sent round a memo to his staff one year ago, in DECEMBER 2008, that he had been invited by President-elect Barack Obama to consult with him regarding health insurance reform. He also let staff know that, for the next several months, he would be dividing his time between the home office and a new office he would have in Washington DC while he worked with President Obama and CEOs from other large health insurance corporations to address new health care overhaul possibilities.

After some months of apparently successful discussions and decision-making, said CEO returned to the home office with instructions for his staff on how implementation of big changes for elderly “members” enrolled in the Medicare Advantage HMO plans would be handled. Subsequently, elderly “members” (sometimes called “beneficiaries”) received letters letting us know that we were going to pay through the nose for the bargains made in D.C. However, those letters did not offer us any explanation. The insurance company staff, on the other hand, was given an explanation for why drastic increases in premiums, drug costs, and additional co-pays were now necessary. They were told that federal funding of Medicare Advantage plans was to be cut by hundreds of billions of dollars. (What? But there wasn’t even a bill being debated yet!) And, that the government had reduced payments to Medicare Advantage HMO plans by $40 per person per month. Costs to the corporation will increase by another $40 per person per month, amounting to a loss for the insurance company of $80 per person per month. Some of this enormous loss in income would have to be made up for by large increases in premiums for the low-income elderly enrolled in those plans, along with additional increases in what seniors pay for drugs and co-pays. The remaining shortfall would be “absorbed” by the corporation, and by the medical groups of physicians and hospitals that contract to provide services under the HMO plan.

This was the first time in five years this Medicare Advantage HMO had been forced to raise premiums and drop plans I was told. Staff can’t keep up with the number of calls they are getting. Besides “members” own desperate concerns, they are relating horror stories about friends and relatives across the country losing their plans, or premiums and other costs skyrocketing. And this is only the beginning. Further cuts in government funding are anticipated once the health reform bill is actually passed.

Both Republicans and Democrats have consistently been in agreement with the $500 billion cut in funds for Medicare Advantage programs. They have never seriously questioned, or publicly debated that decision. (See my previous article “The Skinning of Seniors: Who Gives A Damn”www.openmediaboston.org/node/1044). If you don’t understand the consensus around this issue, then you really do not understand the purpose of the health insurance makeover bill now being debated. Were you also listening to the President’s promises and dire warnings broadcast to the nation as he stood surrounded by Senate Democratic leaders? He said:

"This plan will strengthen Medicare and extend the life of that program. And because it gets rid of the waste and inefficiencies in our health care system, this will be the largest deficit reduction plan in over a decade….

“These aren't small changes. These are big changes. They represent the most significant reform of our health care system since the passage of Medicare. They will save money. They will save families money. They will save businesses money, and they will save government money. And they're going to save lives….

“The stakes are enormous for businesses, who are already seeing their premiums go up 15, 20, 30 percent. You know, a lot of the critics of this entire process fail to note what happens if nothing gets done, and the American people have to be very clear about this. If we don't get this done, your premiums are guaranteed to go up. If this does not get done, more employers are going to drop coverage because they can't afford it. If this does not get done, it is guaranteed that Medicare and Medicaid will blow a hole through our budget…” (AP 12/15/09)

So Medicare is the culprit. Cuts in Medicare will be our salvation. Failure to stop the wasteful spending in Medicare will defeat the entire plan. And “stakes are enormous for businesses!” Big Businesses, not the poor and elderly citizens, are suffering from higher premiums already increased as much as 15% – 30%!

This attempt to make low-income elderly and their “wasteful” Medicare Advantage programs the butt of demands for health care overhaul has been the focus of a disinformation campaign from the beginning. Early arguments purporting to analyze “Medicare Advantage overpayments,” play greedy, aging elders against all other groups competing for scarce medical resources: elderly vs. those under 65, and the “50 million [young] uninsured people,” and the underpaid physicians, (not to mention those needy insurance companies the Prez said are suffering from high premiums!). While agreeing on the need to cut funding to Medicare Advantage plans, representatives for the largest private health insurance companies (e.g. AARP) have also wanted to extend Medicare coverage to 50 – 65 year olds. Private insurers also, from the get-go, have promoted the idea that requiring all Americans to purchase health insurance would solve the scarce resources problem. Drug companies early on proposed covering the uninsured by expanding Medicaid, and have supported federal subsidies for the middle-class. (AP, 6/1/09 “Health Overhaul Draws Group’s Competing Demands.”) It is clear who has to bite the bullet here. As one reader wrote me, it is time for low-income seniors to “sacrifice” and “share” their benefits.

In this strategy of “divide and conquer,” pitting the elderly against “minorities” is another underhanded tactic (as if minorities are not part of the elderly population enrolled in Medicare Advantage HMO plans). Early in the game the Center on Budget and Policy Priorities (CBPP) raised the issue in their (2/20/09) publication entitled “Curbing Medicare Advantage Overpayments Could Benefit Millions of Low-income and Minority Americans.” They think that cuts in funding to Medicare Advantage plans is the solution to financing universal coverage that would include affordable health care for “more than 25 million Americans belonging to minority groups” who lack insurance. The CBPP repeats the same misleading arguments about services under Medicare Advantage costing more, on average, than the same services under traditional Medicare.

Dear goddess, if traditional Medicare were comparable to Medicare Advantage coverage, why would anyone want anything but traditional Medicare? The fact that traditional Medicare doesn’t even cover annual physicals, eye exams, hearing exams, eye glasses, etc.; and requires deductibles, and additional payments of 20% - 50% of physicians’ charges—and therefore would cost me far more per month than my Medicare Advantage HMO premium (prior to 2010!!), has been explained by me elsewhere and often in previous Counterpunch articles. That, together with the fact that when you “disaggregate” the data, it is crystal clear that Medicare Advantage HMO plans are more efficient and cost less than traditional Medicare for the same services. (Again, see Report to Congress: Medicare Payment Policy of March 2009, cited in “The Skinning of Seniors: Does Anyone Give A Damn?”www.openmediaboston.org/node/1044)

The CBPP goes on to argue that most minorities are enrolled in Medicaid, not Medicare. Yes, if they are low-income, uninsured, disabled, and not eligible for Medicare, that is true. It is also true that that due to “disparities in income and employment,” minorities are “less likely to have health insurance through jobs,” low-wages making insurance unaffordable even if the employer offers it. But, how do you get from these facts to the conclusion that the only way to resolve competition over supposed scarce resources (a/k/a ‘the expense of extending coverage to minorities’) requires stiffing low-income seniors on the least costly of all Medicare Advantage plans (the HMO)? Well, of course, the only way the nation can afford the expense of extending coverage to uninsured minorities is to curb “excessive payments” to Medicare Advantage programs. I grew up in a country where racist thinking went largely unquestioned. I had no idea how quickly ageism would find a place in the Capitalist tool kit.

Many may think it sacrilege to criticize the work of the CPBB. Nevertheless, the ideological bias that plots the path to universal coverage benefiting minorities by way of destroying Medicare Advantage HMO plans for low-income elderly is undeniable. The CPBB does not appear to recognize that fighting over crumbs dropped by gluttonous billionaires is not the only framework within which to analyze possibilities for real universal health care coverage. Once you buy into a model based on existing limits of so-called scarce social resources, the circular reasoning goes on and on.

Another agency schooled in this same political perspective is the Medicare Payment Advisory Commission (MedPAC), also based in Washington, D.C. MedPAC is an “independent Congressional agency” established in 1997 to advise Congress” on payments to private health plans participating in Medicare and providers in Medicare's traditional fee-for-service program.” Carlos Zarabozo is a consultant, and Scott Harrison a policy analyst for MedPAC. An abstract of their paper “Payment Policy and the Growth of Medicare Advantage” appeared in “Health Affairs” on November 24, 2008. Again, not to beat this poor dead horse much more, they ignore the distinction made by the Report to Congress on Medicare spending, and regurgitate the well-chewed wisdom that Medicare Advantage plans, “on average” are paid “113% of what expenditures would have been under the traditional Medicare program.” No mention of the fact that the data they base this statement on also shows that Medicare Advantage HMO plans cost 98% of what expenditures would be under the traditional Medicare program, according to MedPAC’s own analysis!

They note that from 2003 to 2008 the number of “beneficiaries” enrolled in Medicare Advantage plans doubled. Medicare Advantage programs were created in 2003 as part of the Medicare Modernization Act. In that first year of existence, 5.3 million enrolled. By 2008 the number was 10 million enrolled. They admit that the more expensive plans (PFFS) that allow enrollees to choose their own physicians, hospitals, and specialists have grown the fastest. And, apparently, on that basis they support “Sen. Max Baucus, chairman of the powerful Senate Finance Committee” and his plan to “address overpayments to private insurers in the Medicare Advantage program.” Wait a minute! What about my HMO plan that comes in at 2% under what the cost would have been under traditional Medicare? You know, the plan that millions of low-come elderly found not only affordable, but provided the more comprehensive, high-quality coverage. What is the rationale for killing that program? Well, actually, it has not yet been killed—just priced out of sight for most of us who were on it--due to its efficiency no doubt!

Remember, these arguments for taking hundreds of billions of dollars in funding away from insurance plans for low-income elderly were already being pushed as President-elect Obama began choosing his cabinet and advisors over a year ago. He subsequently became the most vocal proponent of paying for “deficit-neutral universal health care reform” by cutting $500 billion in funding to Medicare Advantage plans. On that point the President has never equivocated. It is has been the one means of paying for the enormous bailout of the insurance industry that Obama and Congress seem to agree on. By December 3, 2009, ABC News could announce that the manly men of the Democratic party had stood their ground and ripped off senior citizens without a shutter: “Unflinching on a critical first test, Senate Democrats closed ranks Thursday behind $460 billion in politically risky Medicare cuts at the heart of health care legislation, thwarting a Republican attempt to doom President Barack Obama’s sweeping overhaul.”

David Espo, AP Special Correspondent (“Health Bill Survives First Big Test—On Medicare” 12/2/09)), reported “The bid by the bill’s critics to reverse cuts to the popular Medicare program failed on a vote of 58 – 42, drawing the support of two Democratic defectors. Approval would have stripped out money needed to pay for expanding coverage to tens of millions of uninsured Americans.” So there, take that you greedy, racist low-income elderly!

The Senatorial Terminators had AARP covering their backs: “The AARP supported the 10-year package of cuts in projected spending, giving Democrats political cover for their decision to pare back subsidies to private Medicare plans as well as payments to hospitals, hospices, home health agencies and other providers.” And, of course, there was Sen. Baucus assuring us that “Our bill does nothing to reduce guaranteed Medicare benefits.” He should have added, “as long as you can afford to pay for them, now that we are not going to fund them.”

While the Dems insisted that no benefits would be cut and “its finances would be strengthened,” I was looking at the letter I had received weeks earlier advising me of the 52% increase in my Medicare premiums.

If you want the “inside dope” on who done it, I strongly urge you to check it out for yourself. Call your Medicare Advantage HMO and ask them. But be nice. After all, they are just workers following orders, doing their job. If you want to call someone to account, write the CEO and the members of Congress who misrepresented you.

Mary Lynn Cramer, MA, MSW, LICSW, a low-income senior enrolled in a Medicare Advantage HMO plan, has a background in the history of economic thought, and clinical social work. She can be reached atmllynn2@yahoo.com.