Retired Teachers Chapter News

Restoring Medicare’s mission

Jan 31, 2008 3:27 PM

It seems to me that those of us enrolled in traditional Medicare — we’re 81 percent of Medicare beneficiaries — should be pretty hot under the collar about subsidizing the Medicare Advantage Plans out of our own pockets to line the pockets of insurance companies for the benefit of the other 19 percent.

Each of us pays $24 of our Medicare premiums each year to bankroll the insurance companies for the 12 percent to 19 percent more they get to cover their Medicare Advantage Plan beneficiaries. That averages out to a cost for Medicare of $1,000 more per Advantage Plan enrollee than it costs to cover us. Insurance companies have been profiting handsomely from the billions in subsidies the government has been handing over to them since 2003. This year alone their bonanza was $75 billion.

But much more serious is the fact that the $24 each of us pays to subsidize the insurance companies is actually aiding and abetting the privatization of Medicare. We are unwittingly eroding Medicare and unless we stop the erosion now, unless we demand that the playing field be made level for both traditional Medicare and Medicare Advantage Plans by putting an end to these unfair subsidies, the plan that has served so many of us so well for so many years will disappear down the insurance company rabbit hole.

The issue of Medicare subsidies has made the front page of The New York Times on three occasions recently. According to a story on the front page of The New York Times’ Business Section on Dec. 5, a slump in the health care market caused by employer cutbacks in health benefits has caused insurers to aggressively ratchet up campaigns to enroll new customers. What better pool than Medicare beneficiaries?

United Health, which is the nation’s largest health insurer, already has 1.3 million Medicare Advantage enrollees and is in the market, in partnership with AARP, for more. It will get about 15 percent of its 2007 pretax profit of $7.48 billion from Medicare. Humana, which ranks No. 4 in size, hopes to add 200,000 to the 1.1 million already in its Advantage program. It is expected to gain $1.28 billion in pretax profits this year, three-fourths of that from Medicare subsidy dollars.

So the scramble to cash in on subsidies will continue to intensify. A Dec. 17 Times article warned that Medicare recipients will be facing “hard-sell” campaigns by insurers to get them to sign on to Advantage plans. It cited recipients who complained of “being tricked” into enrolling in Advantage plans. Despite fines of $770,000 for marketing violations — an Oct. 7 Times article — levied against 11 companies and the shutdown of a Florida private plan with 11,000 members, deceptive marketing continues.

Some big insurers are steering clear of Medicare as the pool from which to draw more subscribers because they sense the tide may be turning as Congress turns a critical eye on the antisubsidy battle that we hope is shaping up. The Senate Finance Committee is considering a measure to cut spending on Advantage plans with some Democrats calling for cuts of $20 billion over five years. Republicans are resisting the cuts.

In the House, the mood is more aggressive with a vote last summer to cut Advantage payments by $54 billion over five years. An insurance company trade group pushed back so hard in misleading TV ads that the American Medical Association and AARP felt obliged to counter. Their ads charged the insurance companies were lobbying “to keep billions in excess Medicare payments that seriously threaten” care for everyone.

As I noted in an earlier column, the National Committee to Preserve Social Security and Medicare believes, as we do, that continuing to pay private insurance companies to provide services that Medicare provides more affordably and efficiently is “unconscionable” and will ultimately “unravel the universal protection Medicare currently provides.”

So what can we do to get back to the original mission of Medicare? Join our fight! Sign the petition in our latest newsletter, The Retiree, addressed to Senate Majority Leader Harry Reid demanding that the playing field be equalized between traditional Medicare and Medicare Advantage Plans. Then fill out the coupon to become a volunteer in our campaign to stop the privatization of Medicare. Finally, if you haven’t already signed up for COPE, our political arm, please get aboard now. We need to have every single retiree’s voice registered in this fight.

If you don’t have a copy of the newsletter, you can download the petition and coupon.

Please send a personal message to your member of Congress asking him/her to vote against Medicare privatization by voting to phase out the Medicare Advantage subsidy.