Medicare is the new cash cow for insurers

Below is an article from Just Care. It describes how the federal government is continuing the privatization of Medicare bit by bit. (see my 11/30/21 post, Danger, Will Robinson, Danger!!!) At a time when it should be obvious that we desperately need expansion of public health care, what we are getting is the exact opposite.

Has the massive health care industry, which accounts for roughly 20% of our gross domestic product, improved the health of ordinary Americans? Here are a few relevant facts:

• The US spends approximately twice as much per capita on health care as other developed nations 
• The US ranked 46th in the world in life expectancy before COVID-19, just below Estonia and Cuba
• The US has seen a decline in life expectancy starting in 2014 (well before COVID). It is the only nation in the developed world to see such a decline. (As a result of COVID, some developed countries did see a decline in 2020, but they all recovered in 2021 - that is, except the US)
• The US infant mortality rate is double that of most European countries and higher than that of Cuba and Serbia.
• A December 2021 poll found 46% of insured adults struggled to afford out-of-pocket costs and 29% have not taken medicine as prescribed because it’s too expensive.

For those of us who have been demanding Medicare for All, I wouldn't be surprised to see the medical insurance profiteers joining our ranks, now that they have figured out how to make even more profits from Medicare, profits that are guaranteed by our tax dollars.

I have made a few edits in the article for brevity and clarity. The edits are in italics.

Medicare is the new cash cow for insurers

April 13, 2022 

by Wendell Potter

In a move generally ignored by most media outlets, the Biden administration this week made the shareholders of a small number of for-profit health insurers much richer.

The insurers’ new cash cow is the federal government’s Medicare program, which has become increasingly privatized since former president George W. Bush signed the Medicare Modernization Act into law in 2003. That law is best known for establishing the Medicare Part D prescription drug benefit (without allowing the government to negotiate lower prices for the drugs like insulin). It was largely written by lobbyists for pharmaceutical and health insurance companies to ensure an ongoing stream of billions of dollars in profits.

Of even greater significance to the insurance industry, though, was a provision of that law that took a languishing private alternative to Medicare–known until 2003 as Medicare+Choice–and began throwing enormous sums of money at private insurers to entice them into participating in what became known as Medicare Advantage plans.

In various ways, the federal government since 2003 has overpaid private insurers hundreds of billions of dollars as an incentive to continue offering those plans. And every year, the federal Center for Medicare and Medicaid Services (CMS) has given those insurers raises (paid for by increasing the Medicare Medical Insurance deduction from the Social Security benefits), to the point that Medicare Advantage plans–which were touted by many politicians as a way to save taxpayers money–actually cost the government considerably more per enrollee than traditional Medicare.

This week, CMS announced that private insurers would get one of the biggest raises in the history of the Medicare Advantage program–8.5%. That was even more than the 7.9% increase CMS had previously signaled it would approve and that had triggered outrage among many health care reform advocates and some members of Congress.

Investors were so pleased that yesterday morning they rushed to buy shares of Anthem, Centene, Cigna, Humana, and UnitedHealth Group, all of which are traded on the New York Stock Exchange and all of which are big players in the Medicare Advantage marketplace.

The biggest winner was the biggest Medicare Advantage player of all – and the biggest for-profit insurer – UnitedHealth. United’s stock price hit an all time high of $526.97 yesterday before settling down to close at $517.76 a share. That’s around $500 a share more than what a share of the company’s stock was worth when Congress passed the Medicare Modernization Act in June 2003.

This helps explain why you see so many Joe Namath commercials on TV every fall during the Medicare Advantage open-enrollment period. Insurers spend billions of taxpayer dollars on misleading ads designed to lure as many seniors as possible into their plans.

It also explains why the big health insurers are now getting far more of their revenues from government programs (which means from taxpayers) than from private paying customers.

Last year, the six biggest health insurers made more than $60 billion in profits, fueled in large part by the money they now take in from Uncle Sam. Reviewing 12 years of those companies’ financial disclosures since the Affordable Care Act was signed into law reveals that almost 90% of their collective gains in health plan enrollment came from government programs, mostly Medicare.

Keep in mind that most of the additional money CMS plans to give Medicare Advantage plans will go to just a few for-profit insurers, all of which have reported record profits over the past few years. And as Kaiser Family Foundation researchers have found, almost half of Americans enrolled in Medicare Advantage plans are in plans operated by United and Humana.

The rapid growth of Medicare Advantage plan enrollment since 2003 has been nothing short of remarkable, doubling over the past decade. This year, more than 28 million people–45% of the total Medicare population–were enrolled in a Medicare Advantage plan.

It is long past time for members of Congress to start paying attention to how a handful of health insurers are depleting the Medicare Trust Fund in their ongoing quest to make their shareholders richer.