Among the $500 billion in Medicare cuts that will provide the
bulk of the financing for Obama's health care plan is a $160 billion to $180
billion cut in the Medicare Advantage program, which offers a range of
benefits not available to beneficiaries under basic Medicare.
Medicare Advantage should be Obama's favorite program. It
combines all the elements he likes -- premiums are subsidized for low-income
elderly, and the companies negotiate low-priced, managed care that
emphasizes prevention, treatment of chronic conditions and coordination
among doctors. As a result, its costs on the one hand and its premiums on
the other are both much lower than with conventional insurance.
Ten million primarily low-income elderly have voluntarily
enrolled in Medicare Advantage and realize savings of about $1,000 annually
in enhanced benefits over and above what Medicare itself provides. These
extra benefits include reductions in out-of-pocket costs and comprehensive
drug coverage, vision, dental and hearing benefits, wellness programs (like
gym memberships), and disease management and care coordination programs.
Medicare Advantage, which gained momentum during the Bush-43
years, essentially implements all the economies and efficiencies that Obama
preaches nonstop. Doctors speak to one another, duplication is avoided, care
is managed, and there is an emphasis on prevention.
The alternative to Medicare Advantage is Medicare supplement
plans, popularly called Medigap coverage. But these conventional health
insurance policies offer fewer benefits at higher premiums. They offer no
care coordination, no chronic care management, no pay-for-performance
incentives. They have no way to control costs. They just write out checks.
Because Medicare Advantage negotiates payment levels and saves
money through bulk purchasing, inpatient costs run 20 percent to 25 percent
lower than under Medigap insurance. More patients are handled through
outpatient care. X-rays and other radiation cost 10 percent to 20 percent
less, and durable medical equipment like wheelchairs, walkers and oxygen
bottles run one-fifth less than with conventional insurance policies.
So why is Obama so keen to cut Medicare Advantage?
Here's a clue: AARP (the American Association of Retired
Persons) does not sell Medicare Advantage. But it makes a vast amount of
money selling Medigap coverage. AARP has had no higher political priority
than to curb the Medicare Advantage program and replace it with Medigap
insurance. The profit margins on Medigap are greater, and AARP has every
intention of exploiting them with Obama's help. His price? AARP backing for
his program.
The American Seniors Association (ASA), an alternative to AARP
that represents hundreds of thousands of elderly, says, "It is outrageous
that Medicare Advantage, a private program with premium assistance for
seniors ... has come under attack." Stuart Barton, ASA president, notes that
under Medicare Advantage, private healthcare companies "compete to provide
care based on a negotiated price."
Obama's deal with AARP represents special interest politics at
its worst. He has already negotiated a deal with the big drug companies to
get their support for his bill (and their advertising bucks to promote it)
in return for guaranteeing that the cuts in their prices and profits will be
small. And, by cutting Medicare Advantage, he signed up the AARP too.
Obama plans to slash the premium subsidies to low income elderly
for Medicare Advantage coverage. This would drive up the premiums and drive
many poor seniors into Medigap coverage. And then, most cynically, he would
take the money he saves on shortchanging poor old people and use it to
subsidize the policies of people in their 20s, 30s, 40s and 50s who are, by
definition, not poor (and thus not eligible for Medicaid).
And all this from a liberal? A Democrat?