“Medicare Advantage Companies Are Wasting Up To $140 Billion Annually”; Fayette County News; 1-3-23

Medicare Advantage Companies Are Wasting Up To $140 Billion Annually –  We Can Better Use That Money 

By James P. Waters and Jack Bernard 

Medicare Advantage (Medicare Part C), a for-profit program, has been growing rapidly over recent years. Medicare Advantage (MA) has already enrolled over 50% of patients eligible for Medicare ¹. It will account for an even larger percentage in the future unless the public is alerted to its many downsides.  

MA plans are for-profit, by design focused on returns rather than patients. It is the legal, fiduciary responsibility of these companies, their management, and boards to maximize profits versus assure high quality, inclusive patient care. Because it is so profitable, MA is marketed heavily by publicly held companies like Cigna, United Healthcare, Humana, and other insurance giants. One of the authors worked for one of these firms. 

MA plans “cherry-pick”- attracting less ill patients. But they are paid according to the average cost of a Traditional Medicare patient. Plus, they “up-code”, charging the government more than they should for less ill patients. Thus, patients enrolled in those plans cost less to the insurance company, leading to overpayment of these plans… costing taxpayers who ultimately pay the bill for over charging.  

Advantage plans extensively market unique benefits such as dental care, vision, hearing and gym memberships. However, many patients enrolled in these programs have trouble accessing those benefits. More patients experience cost-related barriers in accessing benefits such as dental care in Medicare Advantage than in Traditional Medicare³. Therefore, some patients don’t even use this care, allowing Advantage companies to keep money that would have been spent on those benefits and maximizing their profits, their goal. 

A new report by Physicians for a National Health Program (PNHP) details the overpayment of MA programs.⁴   PNHP projects that American taxpayers are overpaying Medicare Advantage programs from   $88 billion to $140 billion annually, money that could be used to extend Traditional Medicare to all age groups versus only those over 65 or provide additional benefits, as described below.  

Per their analysis, “cherry-picking” healthy patients is resulting in an overpayment of $46 billion due to Advantage programs being paid for the average cost of Traditional Medicare patients. Further, patients are prevented from using their benefits, contributing to this overpayment by around $36 billion.  Further, much of the money going to Medicare Advantage programs is not being used for patient care but rather goes to marketing and administrative costs, which is how for-profit healthcare works. Administrative costs average 12% for insurance companies versus 2% for Traditional Medicare. 

You may be wondering, “How else can we use money saved by eliminating corporate profiteering?” Per PNHP, we can cover the entirety of Medicare Part B or Medicare Part D, eliminating existing premiums for those covered. Plus, the money can be used to cover dental, hearing, and vision benefits for ALL Medicare and Medicaid members. 

Another use of these savings was revealed recently at the PNHP annual meeting on November 11^th in Atlanta. According to the Kaiser Family Foundation, America’s total medical debt reached at least $195 billion in 2019. If the money that is being overpaid to Medicare Advantage companies were used to alleviate America’s medical debt, it could be extinguished in as little as 18 months. Isn’t that a better use of taxpayer money versus padding the pockets of shareholders and CEOs? 

James Waters, a 3rd-year medical student, is a national leader of Students for a National Health Program. Jack Bernard, a retired senior corporate executive, has worked extensively with major healthcare systems nationwide. He is on numerous local, state and national healthcare boards (including Chairing the Fayette Board of Health).