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Medicare Advantage Raises Costs: MedPAC Refutes AHIP Claims

For the record: MedPAC’s response to AHIP’s recent “Correcting the Record” blog post.
March 3, 2021
By MedPAC Staff

“A recent blog post (“Correcting the Record”) from America’s Health Insurance Plans (AHIP) provides an inaccurate description of how the Medicare Payment Advisory Commission (MedPAC) compares spending in the Medicare Advantage (MA) program to Medicare fee-for-service (FFS) spending. The blog questions MedPAC’s long-standing assessment that, when properly compared, Medicare spends more overall for enrollees in Medicare Advantage than the program would have spent for similar beneficiaries enrolled in traditional FFS Medicare.[1]  . . .

Since 2004, our MA status report has presented a comparison of MA and FFS spending levels. This comparison aims to make an apples-to-apples comparison by accounting for a variety of differences between the two programs, such as:

  • the health status of MA and FFS enrollees,
  • the geographic distribution of MA and FFS enrollees,
  • Medicare spending for hospice services and graduate medical education (both direct and indirect), and
  • the tendency of MA plans to submit more diagnosis codes for their enrollees, which causes the risk scores for MA enrollees to be higher than the risk scores for similar FFS enrollees. . . .

When such adjustments are made, it is clear that Medicare spending for MA beneficiaries exceeds that for comparable FFS beneficiaries.  . . . we find that, since 2004, MA spending has consistently been higher than FFS spending, although the difference between them has varied over time (Figure 1).


Figure 1.  Medicare has paid more to MA plans than FFS Medicare spending would have been for the same enrollees, 2004–2021

Figure 1_500px

Comment by David Himmelstein and Steffie Woolhandler

Private insurers garnered $278 billion from Medicare in 2019, a figure expected to rise steeply in the years ahead.  Their overhead averages 18% of their total premiums – equivalent to about $50 billion in 2019 alone.  In contrast, the overhead of traditional Medicare is only 2.3%.

MedPAC – the official Medicare advisory panel – has long estimated that private Medicare Advantage (MA) plans raise Medicare’s costs because the plans selectively recruit (and receive premiums for) healthier than average seniors who would cost Medicare little if they stayed in traditional Medicare; selectively disenroll the expensively ill; and “upcode” to make their enrollees look sicker than they actually are, boosting their premiums.

America’s Health Insurance Plans (AHIP) – the private insurers’ trade group – recently issued a report disputing MedPAC’s figures, and claiming that the MA program is actually a money saver.  The MedPAC’s staff’s rejoinder makes it clear that AHIP is dead wrong.

The MA program enriches private insurers but impoverishes the federal treasury.  It’s high time we ended it.  A Medicare for All reform must exclude MA, and the enormous waste it imposes on our health care system. 

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Sustained & Robust Support for Single Payer in California

Lake Research Partners
Polling on California Recall and Medicare for All
May 3, 2021

A new poll shows that likely voters in California strongly support  a state Medicare for All healthcare system, and that Governor Newsom seeking permission from the Biden Administration to fund the new system with federal dollars would strengthen his support in the upcoming recall election and among his potential supporters in the regularly scheduled re-election next year.
….

Overall, likely voters in California support a state Medicare for All system by a +26-point margin,  with 60% of voters supporting it and 34% (comprised largely of Republicans) opposing it. 

Among  “base” voters (those voting strongly or not-so-strongly “No” on the recall), 86% support Medicare for All (a +76-point margin of support). Core constituencies important to Governor Newsom’s recall effort also support Medicare for All at high margins, including registered Democrats (+73), women (+33), voters under 50 (+42), Latinos (+43), and AAPI voters (+48). Support for Medicare for All remains strong (52% to 34%) even when a comparative message is tested attacking Medicare for All, with the new system maintaining extremely high support (75%) among those who would vote “No” on the  recall, and strong majority support (62%) among swing voters. 

How the question was asked:

Supporters say Medicare for All will guarantee every Californian quality care with no premiums, co-pays, or deductibles, while ending the extreme health care inequities exposed by COVID-19. It would lower costs by eliminating insurance company profits and waste while reining in excessive drug and hospital prices. The state would expand care with existing funds plus more equitable taxes on large businesses and the wealthy, while we would have free choice of doctors, pharmacies, and hospitals, and would pay less for it.

Opponents say Medicare for All will require 350 billion dollars a year more in taxes, nearly tripling the state budget and making it impossible to fund priorities like better schools, ending homelessness, fighting climate change, managing drought and wildfires, and improving transportation. They say that under a one-size-fits-all health care, consumers lose choices and bureaucrats ration care. They say we should improve our current system which already covers 93 percent of Californians, not adopt a costly system of government-run medicine.

Comment by Jim Kahn

This remarkable poll was conducted for political purposes, and not widely publicized. But it is indeed worthy of note, and cause for optimism. It was conducted by Lake Research Partners, a highly respected firm known recently for work with the Biden campaign. Their polling is sophisticated and reliable.

The key finding is that 60% of California voters favor single payer — still 52% after hearing the pro and con arguments. This balanced presentation is essential for understanding the robustness of support. 

Among voters leaning “no” on the Gov. Newsom recall ballot (mainly, Democrats), support is a sky-high 86%. 6 out of 7 voters. And voting tendency for Newsom increases if he pursues single payer.

The voters are speaking. Are the politicians listening?

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Medicine Must Meet the Moment on Racial Justice

AMA Doctors Meet Amid Vocal Backlash Over Racial Equity Plan
U.S. News
June 12, 2021
By Lindsey Tanner

The nation’s largest, most influential doctors’ group is holding its annual policymaking meeting amid backlash over its most ambitious plan ever — to help dismantle centuries-old racism and bias in all realms of the medical establishment.

The dissenters are a vocal minority of physicians, including some white Southern delegates who accuse the American Medical Association of reverse discrimination.

Dr. Gerald Harmon, the group’s incoming president, is a 69-year-old white native of rural South Carolina who knows he isn’t the most obvious choice to lead the AMA at this pivotal time. But he seems intent on breaking down stereotypes and said pointedly in a phone interview, “This plan is not up for debate.”’’

The six-day meeting that began Friday is being held virtually because of the pandemic. It offers a chance for doctors to adopt policies that spell out how the AMA should implement its health equity plan. But some white doctors say the plan goes too far.

Announced last month, the plan is unusually bold for the historically cautious AMA, acknowledging that racism and white privilege exist in the medical establishment and have contributed to health disparities laid bare during the coronavirus pandemic.

Portions of the plan include the language of critical race theory, referencing the theft of native lands and centuries-old white supremacy. The dissenters took offense and attacked the plan in documents recently leaked online. One leaked draft of a letter intended for AMA executives called portions of the plan “divisive, accusatory and insulting.”

“White males are repeatedly characterized as repressive and to some degree responsible for the inequities. This … implies reverse discrimination,’’ the letter said. It was signed by Dr. Claudette Dalton, a member of the AMA’s Southeastern delegation, four other physicians and five state delegations representing 68 AMA delegates.

Medical Journals Blind to Racism as Health Crisis, Critics Say
NY Times
June 2, 2021 
By Apoorva Mandavilli

The top editor of JAMA, the influential medical journal, stepped down on Tuesday amid a controversy over comments about racism made by a colleague on a journal podcast. But critics saw in the incident something more pernicious than a single misstep: a blindness to structural racism and the ways in which discrimination became embedded in medicine over generations.

“The biomedical literature just has not embraced racism as more than a topic of conversation, and hasn’t seen it as a construct that should help guide analytic work,” said Dr. Mary Bassett, professor of the practice of health and human rights at Harvard University. “But it’s not just JAMA — it’s all of them.”

Following an outcry over the incident, editors at JAMA on Thursday released a plan to improve diversity among its staff, as well as in research published by the journal. 

—

Comment by Eagan Kemp

In a country that has consistently refused to come to terms with its racist history, it should come as no surprise that the medical profession is also in need of a reckoning. 

Almost no aspect of American life is untouched by decisions and institutions that empowered white men over everyone else, even in matters of life and death. And there are few places where the consequences are more deadly than in the practice of medicine. The disturbing  examples are numerous, whether the Tuskegee Syphilis Experiment; exposure of Black, Japanese-American, and Puerto Rican soldiers to mustard gas and other chemicals during World War II; or the complicity of numerous doctors in the torture regime of the Bush Administration. The list goes on and on. The practice of medicine in the services of evil remains a stain on the profession and on the country. 

But racism in medicine is not just a list of egregious episodes. Every day, insurance coverage, access to care, and health outcomes are often far worse for Black, Indigenous, and other people of color than for white Americans. Structural racism pervades our health care system, just as it pervades the rest of American society.

Indeed, public policy issues in the U.S. are typically debated through the lens of race — often implicitly — and health care is no different. Opposition to universal health care has often reflected an unwillingness to extend benefits to Black, Indigenous, and other communities of color. 

As Jeneen Interlandi highlighted in her crucial piece, which is part of the 1619 Project:

One hundred and fifty years after the freed people of the South first petitioned the government for basic medical care, the United States remains the only high-income country in the world where such care is not guaranteed to every citizen. In the United States, racial health disparities have proved as foundational as democracy itself. “There has never been any period in American history where the health of blacks was equal to that of whites,” Evelynn Hammonds, a historian of science at Harvard University, says. “Disparity is built into the system.”

It is crucial to remember that the American Medical Association was initially a whites-only organization, necessitating the creation of the National Medical Association in 1895 by twelve black doctors in Atlanta, GA. In 2008, the AMA formally apologized “for its past history of racial inequality toward African-American physicians.”  

The opposition of the AMA to universal coverage has often come from its unwillingness to see Black and Brown Americans as worthy of the same quality of care experienced by white Americans. We only have to look back at their attempts to block Medicare and other health reforms. The AMA’s opposition to universal health care continues today, though many doctors and medical students are undertaking heroic efforts to push the AMA away from its opposition to universal health care and toward supporting health care justice generally and Medicare for All specifically. But let’s be clear, Medicare for All wouldn’t immediately solve issues of racism in medicine, but it would finally end the coverage gap and improve access to care for millions. It would also allow the collection of better disaggregated data, improving our ability to address health disparities. 

The time has come for change, and doctors must meet the moment and lead on directly addressing racism in health care. Doctors should not take this racial justice reckoning as a negative thing or feel disempowered in their work. Doctors — and all Americans — must individually and collectively engage with their own complicity with institutions that undermine progress on racial justice and make changes personally, professionally, and societally starting where they can. In few other places is that task as crucial as it is in medicine.