Right now, federal taxpayers are forced to purchase new golf clubs for millionaires … as a result of insurers’ flagrant abuse of Medicare Advantage.
Congress established Medicare Advantage in 2003 to harness the power of private-sector competition. The program allows seniors to shop for federally subsidized health plans offered by multiple insurers. Lawmakers figured that forcing insurers to compete for seniors’ business — by offering either lower premiums and deductibles or more generous benefits like dental and vision care — would compel companies to provide higher-quality service than the rigid government bureaucracy could do through traditional Medicare.
It’s a smart idea, and in some ways it has worked. Enrollment in Medicare Advantage has soared. More than half of seniors now choose Medicare Advantage plans over traditional Medicare.
Increasingly, big insurers are exploiting loopholes in the program — and in some cases, defrauding it outright — to maximize their profits at the expense of taxpayers and older Americans.
Congressional Republicans are looking for ways to make healthcare more affordable while reducing our unsustainable deficit. Getting Medicare Advantage back on track might be the best way to accomplish both goals.
Consider how many Medicare Advantage insurers are enticing seniors, including wealthy ones, with preloaded debit cards offering non-medical perks such as golf clubs and greens fees, as well as pet supplies. The cost of these perks ultimately gets folded into premiums, which are then heavily subsidized by taxpayers.
Golf is great, and dogs are wonderful. However, does a nation with $37 trillion in debt and with an entitlement crisis looming, really need to pay for seniors’ putters and pet toys?
A far larger, but less salacious, drain on the treasury comes from a practice known as “upcoding,” where Medicare Advantage insurers artificially inflate the “risk scores” of their enrollees by making them appear sicker than they truly are. As a result, insurers receive inflated payments from the government.
Analysts estimate that the federal government now pays private insurers between 112 percent and 120 percent of what it would cost to cover the same individuals in traditional Medicare. This gap translates into a staggering $84 billion in annual overpayments, a figure that could exceed $1.2 trillion over the next decade.
Corporate giants such as UnitedHealth Group have become the face of this dysfunction, recently facing a criminal investigation by the Department of Justice regarding these practices. Congress has scheduled hearings to investigate further.
It’s a welcome development, but hearings alone aren’t enough.
Congress ought to reform Medicare Advantage by passing the No UPCODE Act, which would stop diagnostic inflation and better align standards between Medicare Advantage and traditional Medicare. It’s a Republican bill, but it already enjoys Democratic support, meaning it could plausibly pass even in an otherwise bitterly divided Congress.
Congress established Medicare Advantage with good intentions. The underlying theory — that the private sector can outperform the government in providing healthcare — is sound. But Washington needs to put in more guardrails to protect seniors and taxpayers from insurers’ abuse and self-dealing.