Of Course It's a Scam

Increasingly, people are recognizing that the private Medicare Advantage advantage plans are inefficient and corrupt.

That being said, when Ezekiel Emanuel is the one calling out the scam, Rahm Emanuel's brother, it is a classic statement against interest.

He has talked about the problems of people getting too much healthcare, "Overutilization," and he has gotten into healthcare related venture capitalism.

Not something that I expected to see:

When President Lyndon B. Johnson signed the bill establishing Medicare in 1965, he explained that it was part of Franklin D. Roosevelt’s legacy of government support for those who need it most, the elderly and the poor. At the time, there were essentially no options for older, nonworking Americans to get health coverage. Johnson signed the Medicare bill in Independence, Missouri, alongside another former president, Harry Truman, who had long advocated for universal health coverage and whose 1945 national health-care plan helped prepare the way for Medicare.

If they were alive today, these presidents would be shocked to learn that nearly half of all seniors will enroll in private, not public, Medicare plans next year. And these private plans in many ways have strayed from Medicare’s core mission of caring for the elderly while using taxpayer funds responsibly.

Since its creation in the 1990s, the Medicare Advantage program has allowed seniors to get coverage through private insurance companies that receive monthly, per-person payments from the government to offer services comparable to traditional Medicare’s. Early proponents of Medicare Advantage, who came from across the political spectrum, saw it as a way to provide retirees with more choices and flexibility to retain existing patient-physician relationships. The program also was meant to save taxpayers money. But it never has. Instead, Medicare Advantage has become rife with waste, abuse, and potential fraud, with private insurers taking advantage of loopholes to overcharge the government.

Recent government reports document how Medicare Advantage plans rake in billions of extra dollars from the federal government by describing their patients as sicker than they really are and by classifying certain conditions and treatments as more serious than they are. As a result of these and other egregious practices, Medicare Advantage costs the government about 3 percent more per person than traditional Medicare—more than $9 billion in aggregate in 2022—and that’s after the Affordable Care Act substantially reduced the level of overpayment to insurers.

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But these advantages are not worth the federal government overpaying MA plans. In some ways, this waste is intentional. For years, the government purposely has overpaid Medicare Advantage to induce insurers to spread the program nationwide, including to rural and other less lucrative areas. The strategy has succeeded. Today, Medicare Advantage is available to 99 percent of seniors in almost every corner of the country. By 2030, it is expected to insure some 60 percent of American seniors. Of course, this growth will correspond to a major increase in Medicare Advantage spending as a proportion of Medicare’s budget, and further compound the waste.

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To do this, first the Justice Department should investigate and criminally prosecute insurance executives and physicians who engage in systematic upcoding. In recent years, eight of the 10 leading MA plans have been audited or faced lawsuits for overcharging. (Some lawsuits have been settled, but others are ongoing, with the insurance companies disputing the allegations.) Unfortunately, such civil prosecutions for return of money don’t often deter bad behavior; instead, they merely get factored into the cost of doing business. But putting a few insurance and hospital executives behind bars could make a difference.

While I agree that Medicare Advantage is a scam that should be ended, I think that the politics are such that this is not possible.

However, it is possible to use aggressive prosecutions, including the spectacle of senior executives being frog marched out of  their offices in handcuffs, would go a long way toward eliminating the worst excesses of this system.