A recent study published in JAMA Internal Medicine reveals the substantial costs that Medicare Advantage plans have imposed on U.S. taxpayers, calling for the termination of the program which has proved highly profitable for others.
According to the Medicare Payment Advisory Commission, Medicare Advantage (MA) plans have overbilled the federal government by $612 billion since 2007, including $82 billion last year alone.
These plans, now utilized by over half of the eligible Medicare population, use various methods to secure larger payments from the government, this provides insurers a fixed amount per patient. The payment size is influenced by the patient’s health status, which MA plans often exaggerate to receive higher payments.
What Do The Experts Say?
“Despite these overpayments, MA plans spend 9% less on medical services compared to traditional Medicare for similar enrollees,” the study states. “Where do the excess payments go? Some fund supplementary benefits, although the amount is undisclosed, and MA enrollees do not receive significantly more dental care or lower out-of-pocket dental costs than those in traditional Medicare. The majority of the excess funds go towards overhead and profit.”
The authors estimate that from 2007 to 2024, MA plans’ overhead will total $592 billion, nearly matching the $612 billion in taxpayer overpayments.
Dr. Adam Gaffney, lead author and assistant professor at Harvard Medical School, describes Medicare Advantage as “a bad deal for taxpayers.”
“Funds that could eliminate copayments or strengthen Medicare’s Trust Fund are instead enriching others,” Gaffney states. “It also hinders care access by imposing bureaucratic barriers like prior authorizations and payment denials.”
Gaffney, along with co-authors Drs. Stephanie Woolhandler and David Himmelstein, argue that it’s time to end Medicare Advantage. “Medicare Advantage plans have, in effect, stolen hundreds of billions from taxpayers,” says Himmelstein, a lecturer at Harvard Medical School and researcher at Public Citizen. “Private plans’ tactics also increase seniors’ Part B Medicare premiums. Even seniors not enrolled in Medicare Advantage subsidize private plans’ profits.”
The study suggests that eliminating Medicare Advantage could redirect the estimated $88 billion in overpayments for the upcoming year to enhance benefits for all Medicare recipients. Traditional Medicare generally does not cover dental, vision, or hearing services, which often drives people to MA plans.
“Expanding benefits and reducing out-of-pocket costs for all Medicare beneficiaries is feasible by eliminating MA and enhancing traditional Medicare,” the study concludes. “This approach benefits both patients and taxpayers.”
Wendell Potter, former insurance executive turned critic of Medicare Advantage, concurs with the study’s authors. “Not only has Medicare Advantage failed to save taxpayers money since its inception, but it has cost $592 billion over the past 17 years due to high administrative costs and insurers’ manipulation of the system for excessive payments,” says Potter, president of the Center for Health and Democracy.
Potter adds. “Reforming MA to address overpayments and abuses like prior authorization is crucial for reform advocates.”
Source: https://www.commondreams.org/news/medicare-advantage-cost
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