EDITORIAL: MEDICARE AND PRIVATE PLANS

If your plan doesn’t achieve its goal, you change your plan. You don’t change your goal just so you can stick with your plan.

Private insurance companies claimed they could provide health care to older adults and people with disabilities for less than Original Medicare. Most of them can’t.

On average, the Medicare Advantage plans these companies offer cost 12 percent more than Original Medicare for each person they enroll. So, the insurance companies are now telling Congress to maintain these overpayments so that plan members can keep the extra benefits these plans provide. But the most expensive of the Medicare Advantage plans, the fast-growing private-fee-for-service plans, deliver the least in terms of extra benefits for their enrollees, according to the Congressional Budget Office. Y et the budget watchdog predicts taxpayer subsidies to these plans will grow from $5 billion in 2006 to $59 billion in 2017.

It’s time to change plans. When Congress gave the Part D prescription drug benefit to insurance companies to run, they predicted that the private sector could deliver lower drug prices than the government could. That prediction hasn’t panned out either. Even accounting for the rebates Part D plans receive from drug manufacturers, these private companies pay 22 percent more than states were able to negotiate for their Medicaid programs, and 31 percent more than the Department of Veterans Affairs pays.

It’s time to change the Part D plan, as well.

Congress should:

• Pay Medicare Advantage plans what it costs to cover the same person through Original Medicare;
• Require Medicare to negotiate directly with drug manufacturers for lower drug prices;
• Give people with Medicare the option to receive drug coverage directly through the Original Medicare program.

It’s common sense.

Medical Record
Limiting benchmarks on payments to Medicare Advantage plans to 100 percent of traditional fee-for-service Medicare costs would reduce spending by $65 billion between 2008 and 2012. A cap on benchmarks to 105 percent would result in $51 billion in savings over the same five-year period (“ The Medicare Advantage Program: Trends and Options,” Congressional Budget Office testimony, March 21, 2007) .

The transition in drug coverage from Medicaid to Medicare reversed a trend toward slower growth in drug spending brought about by effective cost-control measures used by state Medicaid programs, according to researchers for the Centers for Medicare & Medicaid Services. By banding together to negotiate with manufacturers, states sharply curtailed drug spending in 2005, the year before the switch from Medicare to Medicaid (“ Truth Is the Best Medicine, Myth #9: The private sector does a better job than the government in negotiating lower drug prices,” Medicare Rights Center, Public Citizen and the National Legislative Association on Prescription Drug Prices, February 2007) .

"Managed care plans originally came into Medicare saying they could do more for less," [Ways and Means Health Subcommittee Chairman Pete] Stark [Democrat of California] said. "Now that they're in the program, they have changed their tune and are demanding we continue to overpay them to provide their services. That makes no sense"(" Medicare Advantage Cuts Threaten Humana," The Plain Dealer, March 20, 2007) .

-Adapted from: “Common Sense” in Asclepios... your weekly Medicare consumer advocacy update from the Medicare Rights Center , March 29, 2007 • Volume 7, Issue 13

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