HEALTH AND SAFETY

» Drug, Devices, and Supplements

» Physician Accountability

» Consumer Product Safety

» Worker Safety

» Health Care Delivery

» Auto and Truck Safety

» Global Access to Medicines

» Infant Formula Marketing

 

Read our outrages

If you're not outraged,
you're not paying attention!


Read what Public Citizen has to say about the biggest blunders and outrageous offenses in the world of public health, published monthly in Health Letter.

Medicare Advantage — Whose Advantage?

May 2013

Sidney M. Wolfe, M.D.

Is one purpose of increasing government funding of Medicare Advantage (MA) to enhance stock value — to the benefit of stockholders — of large, for-profit MA companies such as United Health and Humana?

In April 2013, the Centers for Medicare & Medicaid Services (CMS, part of the Department of Health and Human Services [HHS]), announced that it would pay even more to already overpaid MA companies. As our colleagues at Physicians for a National Health Program (PNHP) revealed, the announcement of the $71.5 billion [over the next 10 years] gift to MA companies resulted in top insurers’ shares gaining $13.2 billion in one week.

As you may know, MA (also known as Medicare HMOs) is a for-profit alternative to traditional Medicare in which the government pays private insurers on an annual, per capita basis for the care they deliver to the Medicare recipients choosing these plans. The insurers have essentially gamed the system by making it appear that the patients for whom they get reimbursed are sicker and at higher risk, and therefore merit larger government payouts, than is often the case. A January 2013 study by the Government Accountability Office titled “Substantial Excess Payments Underscore Need for CMS to Improve Accuracy of Risk Score Adjustments” documents the waste of government dollars to the benefit of private MA insurers.

President Obama had called for cuts in overpayment under the Affordable Care Act. But as PNHP cofounder Dr. David Himmelstein states, “April’s extraordinary rate-setting directive from [HHS] Secretary Kathleen Sebelius to [CMS], in which she spurned historical practice and the advice of the CMS Office of the Actuary, will result in an obscene windfall to the private, for-profit insurers.... This backroom Medicare giveaway is a heavy blow to taxpayers and the traditional, public Medicare program.”

According to PNHP research, selective enrollment of healthier seniors was the major source of excess payments to these plans before 2004. That year, Medicare adopted a risk-adjustment scheme, but ineffectively: $122.5 billion have been added to Medicare’s costs since 2004. The PNHP researchers conclude, “It is time to end Medicare’s costly experiment with privatization. The U.S. needs to adopt a single-payer national health insurance program with effective methods for controlling costs.” We strongly agree.

Copyright © 2014 Public Citizen. Some rights reserved. Non-commercial use of text and images in which Public Citizen holds the copyright is permitted, with attribution, under the terms and conditions of a Creative Commons License. This Web site is shared by Public Citizen Inc. and Public Citizen Foundation. Learn More about the distinction between these two components of Public Citizen.


Public Citizen, Inc. and Public Citizen Foundation

 

Together, two separate corporate entities called Public Citizen, Inc. and Public Citizen Foundation, Inc., form Public Citizen. Both entities are part of the same overall organization, and this Web site refers to the two organizations collectively as Public Citizen.

Although the work of the two components overlaps, some activities are done by one component and not the other. The primary distinction is with respect to lobbying activity. Public Citizen, Inc., an IRS § 501(c)(4) entity, lobbies Congress to advance Public Citizen’s mission of protecting public health and safety, advancing government transparency, and urging corporate accountability. Public Citizen Foundation, however, is an IRS § 501(c)(3) organization. Accordingly, its ability to engage in lobbying is limited by federal law, but it may receive donations that are tax-deductible by the contributor. Public Citizen Inc. does most of the lobbying activity discussed on the Public Citizen Web site. Public Citizen Foundation performs most of the litigation and education activities discussed on the Web site.

You may make a contribution to Public Citizen, Inc., Public Citizen Foundation, or both. Contributions to both organizations are used to support our public interest work. However, each Public Citizen component will use only the funds contributed directly to it to carry out the activities it conducts as part of Public Citizen’s mission. Only gifts to the Foundation are tax-deductible. Individuals who want to join Public Citizen should make a contribution to Public Citizen, Inc., which will not be tax deductible.

 

To become a member of Public Citizen, click here.
To become a member and make an additional tax-deductible donation to Public Citizen Foundation, click here.