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Friday, October 09, 2009

Advantage Plans Drain Medicare

By Sen. Jeff Bingaman
Democrat, New Mexico
      An article titled “Benefit Cuts May Loom For 68,000 N.M. Seniors” suggested that health insurance reform legislation pending in the Senate could lead to benefit cuts in Medicare Advantage — a private alternative to Medicare. I believe the article left out several important facts.
       Medicare Advantage was created in 2003, as a successor to Medicare+Choice, because private insurers insisted they could provide the same quality care as traditional Medicare at a reduced cost and with more benefits.
       That may be happening in some places, but it has not proved to be the norm; far from it. Nationwide, Medicare Advantage costs taxpayers $1.14 for every dollar spent in traditional Medicare. In New Mexico, the ratio is $1.31 to $1.
       While it is true that seniors enrolled in Medicare Advantage pay higher premiums for extra benefits such as eye care and gym memberships not offered in traditional Medicare, it is also true that those higher premiums do not cover the entire cost of the additional benefits offered to Medicare Advantage recipients.
       To make up the difference, every man and woman across the country enrolled in traditional Medicare pays an average of $90 each year to subsidize their neighbors in Medicare Advantage. That means the 220,000 New Mexicans enrolled in traditional Medicare are subsidizing the health care costs for the 68,000 New Mexicans enrolled in Medicare Advantage.
       According to the Congressional Budget Office, these subsidies are a major factor threatening the solvency of Medicare.
       Equally troubling is the fact that the federal agency responsible for overseeing Medicare tells us there is no effective method in place to determine if these inflated payments to private insurers are indeed being spent on the additional services they offer — and not just contributing to profits.
       In fact, to address these serious issues, MedPAC — the nonpartisan commission that makes recommendations to Congress — is urging that Medicare Advantage be paid the same as traditional Medicare. But Congress does not intend to go that far.
       Instead, the bill being considered by the Senate Finance Committee simply requires insurance companies that want to participate in Medicare Advantage to compete with each other for customers. Such an action would not only return competition back to Medicare Advantage, it also would save an estimated $117 billion over the next decade. Most of these savings are expected from the highest costs states such as Florida, New York and Massachusetts, not New Mexico and other rural states.
       For this reason, even if Congress requires competitive bidding for Medicare Advantage, preliminary estimates indicate that New Mexico's private insurers would still get between $1.16 and $1.18 compared to every $1 spent on traditional Medicare. I am confident that under such circumstances, private insurers would be able to offer a very generous benefits package to New Mexico seniors.
       Health insurance reform is not simply about providing meaningful care to all Americans. It is also about getting control of our nation's extraordinarily high health care costs. Medicare Advantage reforms are an important step in this direction.
       As Congress continues to debate health insurance reform, I will continue to fight for quality, affordable health care for all New Mexicans — including seniors enrolled in both traditional Medicare and Medicare Advantage.
       

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