≡ Menu

Medicare Maneuvers, Part 3: The Insurer Showdown

Norm Wernet, Ohio State Director for the Alliance for Retired Americans, holds a sign to protest Medicare policy that hurts retiree, courtesy of Flickr It seems that Harry Reid gambled and won. In our previous two posts we described the battle being waged in Congress over the proposed 11% paycuts to Medicare physicians. After the Independence Day recess, the Senate Majority Leader and advocacy groups working on behalf of doctors and seniors – as well as informed and angry constituents – were able to put enough pressure on Senate Republicans to finally cross the aisle.

But party lines weren’t the real issue. The two sides squaring off in this debate were private insurers versus the average American. Why? Two words: Medicare Advantage.

As discussed in our July 2 post, Medicare Advantage came about when insurers convinced government that they were getting good at cutting spending on health care, and that maybe the government should learn from some of their tactics. Heck, they said, let’s just let insurers do the job themselves!

Thus Medicare Advantage: the privatization of a portion of Medicare, in which insurers are allowed to offer policies and drug benefits to Medicare-eligible folks.

It’s reasonable and responsible to want to limit health care spending, particularly when the government is footing the bill. The price tag ultimately gets paid by they taxpayers – from our paychecks – and what gets spent on health care does not get spent by some other program.

  • But as human beings we all age, and if we live long enough, we’ll wind up on Medicare. We want it to be adequately funded by the time we or our parents need it.
  • And as human beings we get sick. If our doctors are getting less payment for their services because insurers refuse to pay more than the government standard, then eventually people will stop becoming doctors.


And the kicker is that Medicare Advantage does not save us money.

  • In fact, the government pays the private insurers who administer Medicare Advantage MORE than if the government just delivered Medicare services themselves
  • To the tune of 13% to 17% more!


In other words, Medicare Advantage is a government tax-payer-funded handout to insurance companies.

And so when Medicare spending starts to become unaffordable due to mounting health care costs and huge expenses in other government departments like Defense, the government does what any business would: look for ways to boost efficiency and reduce costs. The easiest way to do this? Either cut the subsidies to the insurers, or cut the payments to the doctors who provide the services.

  • If a doctor is going to get a pay-cut for treating a Medicare patient, and all their other costs are going up, then they’re going to cut the number of Medicare patients they treat.
  • Cutting doctor payments also cuts private insurer reimbursement rates to doctors for non-Medicare patients because insurers don’t pay more than the Medicare standard.
  • Since most of Medicare and insurer payment cuts are applied to primary care physicians, in the long-run we have fewer doctors going into primary care because they’re turned off by how hard it is to make a living.
  • We need MORE time with our primary care doctors as they coordinate our health care and treat our costly chronic diseases and help us prevent serious illness, rather than LESS time because they are forced to squeeze in more patients to cover their shrinking pay checks and rising administrative costs. Costs that are high, by the way, because of dealing with insurers!

So our Senators and Congressional Representatives wisely heeded the call to stop siding with the insurance companies and moved to protect Americans’ health care for a change. They passed a bill that would delay the doctor payments cuts for 18 months, and make up for the looming shortfall in funding needed to cover doctor reimbursements at the current rates by 1) bringing our payments to Medicare Advantage insurance companies more into line with the rest of the program and 2) mandating that the widest-used Medicare Advantage plans be more efficient and less wasteful of the funding they receive.

And when President Bush, as promised, vetoed the newest version of the bill, 153 House Republicans and 21 in the Senate voted against their leader and against the president’s stated priority: preserve private insurers’ role in Medicare.

The total vote count yesterday was 383 to 41 in the House, 70 to 26 in the Senate – both far more than the two-thirds majority needed to block the veto. Interestingly, Senator Ted Kennedy’s (D-MA) showing up (straight from a round of chemotherapy and radiation to treat his brain cancer) to cast the decisive vote in the Senate gave nine Republicans the political cover they needed to then abandon their losing side and align their votes with the Democrats, and in this case, real health care reform.

{ 0 comments… add one }

Leave a Comment