Payments to Medicare’s private plans at risk in Democrats' reform proposals

Sep 10 2009

As part of their effort to find funds for universal health coverage, Democrats have targeted federal subsidies for Medicare's private plans.

Kaiser Health News reports on Medicare Advantage plans in South Florida and nationwide: "As the battle over health care reform intensifies, Medicare private plans, which cover more than one in five seniors nationwide, are caught in the crosshairs. On one level, the debate is simply about money: President Barack Obama and House Democrats want to cut $177 billion in federal payments to the private plans over the next decade to help finance coverage for the uninsured. On another level, the fight over private Medicare plans -- which has been a partisan flashpoint for years -- involves difficult questions on the issues of fairness, efficiency and choice."

"Currently, the federal government pays Medicare Advantage plans, on average, 14 percent more per patient than it pays the traditional fee-for-service program. Those plans include some of the nation's largest insurers, such as UnitedHealthcare and Humana Inc. and many Blue Cross and Blue Shield affiliates. Obama and other critics argue that paying more to the Medicare Advantage plans is unfair to seniors in the traditional program and say the funding cuts will not affect seniors' benefits" (Galewitz, 9/9).

The Plain Dealer also reports on the merits and drawbacks of Advantage plans: They "were supposed to operate more efficiently and curtail the explosive growth of Medicare spending because, the thinking went, the private sector could do anything better than federal bureaucrats, and for less money. For many seniors, this was a great deal, enabling them to avoid the co-payments or gap-coverage policies that many traditional Medicare beneficiaries buy. ... About 23 percent of seniors nationwide, and 25 percent in Ohio, are in Advantage plans. For the government, Advantage plans have not lived up to expectations" (9/9).

Meanwhile, The New York Times reports on pending reform proposals that would provide coverage for early retirees: "Within the battle over President Obama's health care overhaul, critics of organized labor have latched onto a little-noticed provision. ... The provision would cost $10 billion in federal money to subsidize employer-sponsored health plans covering early retirees, as a bridge to Medicare. Labor's critics assert that the provision, aimed at retirees ages 55 to 64, is a Democratic payback to unions and would further drive up the federal deficit." But supporters deny that assertion, saying the approach "would help stabilize the health insurance system and would benefit union and nonunion retirees alike, as well as their employers" (Greenhouse, 9/9).