31 March 2024

A Feature, Not a Bug

In a study that will almost certainly be ignored by the inside the beltway crowd, it was found that Medicare Advantage is charging the US government 22% more for services than its government run counterpart.

One should remember that this is even though Medicare Advantage routinely screws its customers when they get seriously ill:

'A difference that translates into a projected $83 billion in 2024,' one report found

If Joe Biden or Donald Trump or anyone else wants to know how to "cut" tens of billions from the Medicare budget without taking a single nickel from seniors, an obscure government body just revealed how.

But nobody seemed to notice.

The body in question is called the Medicare Payment Advisory Commission, or MedPac. It is an independent, authoritative body that advises Congress on Medicare. It was set up by the Balanced Budget Act of 1997, back when people in Washington were actually doing their jobs.

It just published its latest report to Congress, entitled "Medicare Payment Policy." And the key thing everyone needs to read is on page "XXV," which is how they used to say "25" in Rome.

It reads: "We estimate that Medicare spends approximately 22 percent more for MA enrollees than it would spend if those beneficiaries were enrolled in FFS Medicare, a difference that translates into a projected $83 billion in 2024."

"MA" means Medicare Advantage. ""FFS Medicare" means traditional "Fee-For-Service" Medicare.

In other words: The private insurers who now run more than half of all Medicare plans are overcharging the taxpayers by a staggering $83 billion a year. They are charging us taxpayers 22% more than it would cost us to provide the same health insurance to seniors directly, if we just cut out the private insurance companies as middlemen.


 To put it in context, that is nearly 10% of the entire Medicare budget.

It's more than twice as much as it would cost simply to provide free dental, hearing and vision care to all traditional Medicare beneficiaries, not just those in private "Medicare Advantage" plans.


Medicare Advantage was set up in the early 1980s to introduce some competition into Medicare. The theory was that private insurers might be more efficient than Uncle Sam at providing health insurance to seniors.

It was a nice idea in theory. The only problem? It has never worked. Never. 

It should be noted that the source for this story, Morningstar, is not some left wing advocate for single payer, they are a research and investment management firm.

The application of the private profit motive to healthcare has been a disaster since the beginning of modern medicine.


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