http://www.bloomberg.com/apps/news?pid=206...&refer=homeQUOTE
Insurers’ Medicare Plans Raise Costs, Not Quality (Update1)
By Avram Goldstein
Nov. 24 (Bloomberg) -- Insurers’ government-backed health plans for the elderly have increased taxpayer costs with no evidence of improved care, according to research backing President-elect Barack Obama’s call to lower U.S. subsidies.
Many of the Medicare Advantage plans, as they are called, don’t coordinate care to avoid duplication and ensure the best results, authors said in articles posted today on the Web site of Health Affairs. The plans were devised to offer more benefits than conventional Medicare paid directly by the U.S. government.
About a fourth of the 44 million people on Medicare are covered by the Advantage plans, with the U.S. expected to pay $100 billion this year for the coverage. Congress had increased payments in 2003, helping private insurers led by UnitedHealth Group Inc. and Humana Inc. Obama has called payments to insurers excessive and pledged to reduce funding by $15 billion annually.
“We spent a lot of money on expanding payments for Medicare Advantage plans, and it’s not clear what we got,” said Marsha Gold, a senior fellow at the firm Mathematica Policy Research in Washington and one of the authors, in a telephone interview. “There’s no real evidence that the quality of care is any better.”
Obama made health care a top domestic priority during his campaign for the presidency. Last week, Thomas A. Daschle, a former U.S. senator from South Dakota and an expert on health care, accepted Obama’s offer to become Health and Human Services secretary, a Democratic official familiar with the matter said. The health department oversees Medicare, the program for the elderly and disabled.
Goal Setting
Congress and the new president should set clear goals for Medicare, authors of a separate Health Affairs article said. That means facing down ideologues who want Medicare to wither and those who want it to be the foundation of the U.S. health- care system.
The Advantage plans cost, on average, 13 percent more than the government directly pays doctors and hospitals for patients who stay with the original Medicare program. The 10.2 million subscribers in Advantage make up 23 percent of all beneficiaries.
Depending on location, insurers offer extra benefits such as lower out-of-pocket costs, vision care and gym memberships.
The benefits are subsidized by taxpayers and beneficiaries who aren’t enrolled in Advantage plans. For 2009, Medicare estimates that Advantage costs boosted so-called Part B premiums for non-members by $3 a month, said authors Carlos Zarabozo and Scott Harrison in the journal. Both work for the Medicare Payment Advisory Commission, an independent congressional agency.
Insurance Burden
Insurers at the same time have grown more reliant on the government program as employers cut benefits and eliminate jobs in the recession.
Three companies -- Humana of Louisville, Kentucky; WellCare Health Plans Inc., of Tampa, Florida; and HealthSpring Inc. of Nashville -- depend on Medicare Advantage for more than 80 percent of their earnings before interest, taxes, depreciation and amortization, according to Carl McDonald, an analyst with Oppenheimer & Co. in New York, in a note to investors.
Advantage spending will hasten by 18 months the date when the Medicare Trust Fund will run out of money, which the government projects to be 2019, analysts said in Health Affairs.
Medicare spent $430 billion in 2007, or about 16 percent of the federal budget, to care for the 44 million beneficiaries. Spending, which made up 3.2 percent of the economy in 2007, is expected to grow faster than workers’ wages or gross domestic product, according to the annual Medicare trustees’ report released in March.
Call for Moderation
Analysts Robert A. Berenson, a senior fellow at the nonpartisan Urban Institute in Washington, and Bryan E. Dowd, a health policy professor at the University of Minnesota, said it was time for extremists on both sides of the issue to step aside.
“Allowing an inefficient Medicare program to sink into insolvency in hopes either that beneficiaries will force higher tax rates on their children or that the program will implode, forcing beneficiaries into the individual private insurance market, may be ideologically satisfying, but it is not responsible policy making,” they wrote.
Medicare officials should share information with researchers about the inner workings of the program, Gold said. President George W. Bush’s administration gave out little data, she said.
“It’s been tremendously hard to get information on what’s been happening with the program, and that’s meant that people have been flying blind,” she said.
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To contact the reporter on this story: Avram Goldstein in Washington at agoldstein1@bloomberg.net.
Last Updated: November 24, 2008 10:35 EST
Alright....
With McCain, I did enjoy the belief of personal responsibility in regards to Health Care and in terms of Privitization the idea that it saves money, and keeps matters competative to improve our system. However... Such a system only works if there is no greed in the world.
Health Care has to me become a right in my view, especially for a country such as ours who are paying so much for health care for very bad service. I am not just talking about the actual care, but even the accounting, the hidden costs and so forth that private insurance has perpetuated in the system for them to make money.
You know what is the most messed up part in that? Not only did they add unneeded complexity in an already convoluted system, you pay in to it as you work or when you can afford it, but when you actually get sick and because of that can't get to work, you lose health care when you need it the most.
People then wait till they are sick enough rather than going for the cheaper preventive medicine, to wait till they have to go to the emergency room. That is actually one of the most expensive methods of getting care. Where many who go there don't have insurance and can't pay it. Who then gets saddled with the cost but those of us who are insured.
The industry and companies pay in to such insurance for their employees, which is a big added cost for their operation. I'd think that would help companies especially small to mid-sized ones with their ability to function and stay profitable.
The problem I have with privitization on a needed service such as this is that, private companies are made to make money. They then have the incentive to drive up costs and cut corners to do so, and if they can charge you for any minor thing, or something that doesn't make sense, they will.
I doubt much would change. However, providing universal health care is far from socialism. I think it is just right, especially since everyone who has insurance in the end already pays for the care of those that don't have it any way. (note my point about people waiting to get bad enough to go to the ER and people skipping doses making their sickness worse, and even more of a drag that it raises cost.)
