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In the Advocate September 2023:

Medicare Threatened From Two Sides

Michael Righi

Medicare is bankrupt. Medicare is about to run out of money. These are some of the headlines you find in the main-stream press. It all sounds like a familiar refrain, doesn’t it?

     The New York Times, in a major July 5 editorial, said, “Democrats must recog-nize that changes to Social Security and Medicare, the major drivers of expected spending growth, should be on the ta-ble.” It’s a “painful choice,” but they claim the country has too much debt, and it is social spending that has to be cut. They do not mention military spending.

     Medicare is definitely not “bankrupt.” Part A (hospital services) is funded by workers’ payroll taxes (1.45 percent of wages matched by employers) paid into a trust fund. According to trustees, there’s enough in the fund to cover expenses until about 2030. After that, it would still cover 90 percent of Part A spending.

     Parts B and D are covered by the government’s general revenue, and by enrollees’ premiums (that’s the payment typically taken out of your Social Secu-rity check). These are adjusted annually to cover program costs.

     So, “going broke” is a myth. There may be a very small gap in the Part A trust fund in the future, which could be easily closed with a small tax increase or a reduction in costs (we’ll get to that in a bit).

     But it’s a myth that the austerity crowd, Republicans and too many conservative Democrats, find useful in order to eviscerate social programs. We have beaten back these campaigns for decades now, in order to keep and strengthen Medicare and Social Secu-rity and prevent the rich from gutting them and appropriating all our wealth to themselves.

 

Medicare as Cash Cow

     

If you have been reading The Ad-vocate, you know the other threat: Medicare Advantage, private insurance and profit. 

     Last year Humana made $2.8 billion in profit. They paid out $448 million 

in dividends to their mostly wealthy shareholders, and $17 million to their CEO. They have 5 million Medicare Ad-vantage “customers,” and that’s where they get 80 percent of their revenue. Without the Medicare Advantage gravy train, there would have been a $900 bil-lion loss. Their stock price has gone up 23 percent more than the average.

     They claim they can make money because they are “more efficient.” Here’s what efficiency means in the health care market: cutting costs. Oh wait, those are medical services people need. Data shows that the private Medicare Advantage plans have significantly higher rates of denials of care and required prior authorizations than Tra-ditional Medicare. Efficiency means you can’t always get what you need.

     And it’s certainly not efficient that Medicare (Dis)Advantage plans spend so much time gaming the payment system. They are compensated extra for “risky” enrollees, and they find all kinds of reasons, many of them phony, to exaggerate enrollee risk. It winds up being a huge subsidy from Traditional Medicare to private plans.

     Medicare Advantage plans have a couple of other tricks you may have heard about. Upcoding means they charge Medicare more by claiming their “customers” are sicker than they really are. They also try to attract the least expensive enrollees by advertising benefits like gym memberships.

     A recent University of Southern California study estimates a number for all this overpayment from Medicare to Medicare Advantage plans: $75 billion. A Moody’s report contends “..we believe Medicare Advantage will continue to be a growth driver for the (insurance) industry.” Investors brag that 13 to 30 percent of the money they get from Medicare goes straight into profit.

     That $75 billion would be way more than enough to close the so-called funding gap and make a good start on leveling-up Traditional Medicare and kicking the insurance companies out of health care, period. 

Strengthen Traditional Medicare

     Rather than subsidize private insur-ance profits, those funds could be used to expand Medicare itself. Tradi-tional Medicare should include dental, hearing, and eye care. It should cover prescription drugs, and at reasonable prices. Medicare should not be funding Big Pharma profits either.

    Copays are a residue of free-market philosophy, that people only make correct choices if they have to pay for things. Really? Research shows that folks put off needed care because they cannot afford it. Copays should be eliminated.

     Medicare must not be cut, it must be improved. The age of eligibility does not need to be raised to “save” it. The age of eligibility should be lowered. To birth.

     We also must stop Medicare from be-ing raided by private insurance corpo-rations. In what decent world is health care a profit center?

Michael Righi is a retired economics professor and a member of the Retiree Advocate editorial board.

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