‘It’s Time to Take Medicare Advantage Off the Market’: CounterSpin interview with David Himmelstein on privatized Medicare

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David Himmelstein: “The private insurance companies have ripped off taxpayers to the tune of more than half a trillion dollars.”

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Janine Jackson interviewed professor and Physicians for a National Health Program co-founder David Himmelstein about the problems with Medicare Advantage for the June 28, 2024 episode of CounterSpin. This is a lightly edited transcript.

Common Dreams (6/10/24)

 

Janine Jackson: For decades, people in this country have been suffering and dying due to the cost of healthcare, while public majorities have been saying they want a different system. For decades, US corporations and their political and media megaphones have been telling us that, yes, things as they are are difficult, but a more humane universal healthcare policy is just not possible, not because the policies that would allow doctors to provide the care they deem appropriate, and people to receive that care without going bankrupt, aren’t logistically doable—they are, after all, done in other countries—but because they are not, as the New York Times has repeatedly phrased it, “politically viable.”

So while you’ve likely heard about people choosing between rent and healthcare, and about people rationing their medications, and you have never once heard of people marching in the street chanting, “What do we want? Managed competition! When do we want it? Now!”—here we still are.

The latest gambit is Medicare Advantage, the private sector “alternative” to traditional Medicare in which currently more than half of the eligible Medicare population is enrolled. We were told it would encourage insurers to provide better care at lower cost. New research says, nope, that’s not what’s happening.

“Less Care at Higher Cost: The Medicare Advantage Paradox,” appearing in JAMA Internal Medicine. He teaches at Hunter College and Harvard Medical School. He’s a researcher at Public Citizen and co-founder of Physicians for a National Health Program. He joins us now by phone from upstate New York. Welcome to CounterSpin, David Himmelstein.

David Himmelstein: Thanks for having me.

JJ: So the concept of Medicare Advantage is that insurance companies get a lump sum for each patient, the amount of which depends on the person’s health, and it was presented as a way to bring down out-of-pocket costs while also still providing better care. The analysis that you have just carried out showed that that is not at all what’s happening. Talk us through what you found.

DH: What we found is that the taxpayers are overpaying these Medicare Advantage private plans by tens of billions of dollars each year. In fact, $82 billion last year alone, and $612 billion since 2007. That’s overpayments compared to what it would have cost to cover those same people in the old public Medicare program. So, in effect, the private insurance companies have ripped off taxpayers to the tune of more than half a trillion dollars, and most of that goes to either their bottom line, or to the paperwork that they carry out to realize those profits. In fact, 97% of the total overpayment stayed with the insurance companies. Only 3% went to the perks that they offer to entice people to enroll in their plans rather than staying in traditional Medicare.

JJ: When you say overpayments, what are the mechanisms of that? How is that working?

DH: The plans really trick the system in a couple of ways. One is that they seek out healthy, low-cost enrollees who are going to be inexpensive for them to cover. So they get the lump sum payment from the Medicare program, but the insurance company doesn’t actually need to pay for care. In fact, for 19% of Medicare enrollees, they cost nothing in the course of a year. So when an insurance company enrolls them, they get something like $10,000 or $12,000 a year, and they pay for no care at all. So that’s one thing—enroll healthy and inexpensive people and avoid sick ones.

The second is: make your benefits tailored to be unpleasant and unsustainable for people who are sick and expensive. So don’t approve rehab care, which Medicare traditional pays for, but the Medicare Advantage plans usually don’t. So if someone needs that rehab care, they’re really pushed to choose to go back to traditional Medicare.

And the third way is by inflating the amount Medicare pays them by making the people who enroll in the Medicare Advantage plans and those private plans look sicker on paper, and that increases how much Medicare pays, but in many cases doesn’t actually increase what it costs the plans to cover them. So they’ve leaned heavily on doctors to, say, add as many diagnoses as you can, even if they don’t cost anything, or don’t imply the need for more care. And, over the years, they’ve also taken to sending nurses into enrollees’ homes, not to help them out, but to try and discover additional diagnoses that could up the payment.

So they avoid the sick, they try and evict the sick once they are sick, and they make people look sicker in order to increase the payment they get from Medicare. And those things together result in what the official Medicare Payment Advisory Commission—so this is the non-partisan commission that advises Congress—they said it costs 22% more to cover a patient under Medicare Advantage than it would’ve cost to cover them under traditional Medicare. And as I said, that’s an $83 billion difference last year alone.

JJ: And you have mentioned taxpayers, and I just want to underscore it, the harms here are not just to the enrollees who are having inflated diagnoses, and then not necessarily getting the care they need, but the harms are even to those who are not enrolled in these plans, right?

DH: Absolutely. I mean, as taxpayers, we’re all paying for it. And the tragedy is, Medicare needs improvement. Medicare enrollees are saddled with high copayments and deductibles, and a lot of services that aren’t adequately covered, like dental care and eyeglasses. And if we took that $600-plus billion that’s been really thrown away in overpayments to Medicare Advantage plans, we could upgrade Medicare coverage for all enrollees, and the taxpayers wouldn’t be paying any more. But at this point, the taxpayers are being ripped off, and Medicare enrollees aren’t getting what they need.

JJ: Let me just extend you from there. What are the recommendations that come out of this research? What can people be calling for?

DH: We’re 40 years into this experiment with privatizing Medicare, the Medicare Advantage program. And what we conclude in this analysis is, it’s time to end that experiment. If we had a 40-year failing experiment on any drug, we’d say, take that drug off the market. It’s time to take Medicare Advantage off the market, and to use the money that we’ve been overpaying them to upgrade coverage for Medicare recipients overall.

We need to go further than that. We need a single-payer, Medicare for All, upgraded system for all Americans. And, frankly, we could save huge amounts on the insurance middlemen, not just in Medicare, but in other sectors as well. I mean, for people with private insurance, they’re being ripped off for the overhead of the private insurers and the vast profits they make. So the immediate call is, let’s abolish Medicare Advantage and upgrade Medicare for seniors. But the longer term call is, let’s move everybody into an upgraded Medicare for All program.

JJ: Just, finally, the phrase “not politically viable” doesn’t leave my head, because it’s corporate news media telling the people to cut our hopes and needs to fit the desires of wealthy companies, which of course is not how some of us define politics. But time and again, people show that they are not too dumb to understand how a single-payer system would work, despite years of misinformation around it. People still, in majorities, call for it. And I guess I wish media would listen to people about solutions, and not just catalog the harms of the current system. Do you have any thoughts about what journalism and journalists could do to move us forward on this?

DH: Well, they need to go beyond the talking points that are supplied by the insurance industry and the rest of the people making huge profits off of our healthcare system–the drug companies, and many of the hospitals, and, frankly, the higher-paid doctors as well. So we need to have a rational system, and the news media needs to actually portray the—I would call them crimes that are being perpetrated on the American people, and not say, “we can’t do better;” we know we can do better–and actually have the in-depth reporting on why it is that a reform could and would work in this country.

JJ: All right, then. We’ve been speaking with David Himmelstein, and you can access the analysis we’ve been talking about through JAMANetwork.com. David Himmelstein, thank you so much for joining us this week on CounterSpin.

DH: Thanks again for having me.