Not Worth the Cost: Overpayments to Medicare Private Plans In a…

Not Worth the Cost: Overpayments to Medicare Private Plans

In a Nutshell:
1. It is fiscally irresponsible to pay Medicare private health plans billions of dollars more
   than it would cost to provide care to their members under Original Medicare.
2. Medicare private health plans often provide more expensive and less accessible
   coverage than Original Medicare.
3. Money saved on overpayments to private insurance companies could be used on
   programs for low-income people with Medicare.

Talking Points:
1. It is fiscally irresponsible to pay Medicare private health plans billions of dollars
more than it would cost to provide care to their members under Original Medicare.
Private plans came into the Medicare program with the claim that they could save
taxpayers money. Instead, they cost between 12 percent and 19 percent more per person
than the public Medicare program, amounting to $5 billion per year in unnecessary cost to
taxpayers.

2. Medicare private health plans often provide more expensive and less accessible
coverage than Original Medicare.
While supporters of the insurance middlemen would like us to believe that overpayments
allow private plans to provide a broader range of benefits, plan enrollees often end up with
higher out-of-pocket costs and more coverage restrictions than they would with Original
Medicare. Alternatively, people with Original Medicare have uniform benefits, coinsurance
and copayments, and can purchase supplemental insurance to cover their out-of-pocket
costs. Original Medicare provides not only coverage security, but fiscal efficiency ­ a
review of the annual reports filed by the largest Medicare private health plans shows that
20 percent of private plan budgets go to administrative overhead, marketing costs and
profit. In contrast, only 3 percent of spending on Original Medicare goes to administration
and marketing, and there is no profit taken.

3. Money saved on overpayments to private insurance companies could be used on
programs to help low-income people with Medicare afford their care.
The extra $5 billion a year that go to private insurance companies could be better spent on
broadening eligibility for Medicare Savings Programs and Extra Help, which cover
Medicare premiums and copayments for low-income people with Medicare. Original
Medicare, in conjunction with these low-income programs, provides more consistent
services and lower costs than commensurate Medicare private health plans that target
low-income people with Medicare.




© 2007-2008 Medicare Rights Center                                       www.medicarerights.org
Links to Resources
Related Asclepios Issues:
· Who Is Minding the Store?, October 11, 2007 · Volume 7, Issue 40
  http://www.medicarerights.org/asclepios2007_40.html
· Modernize Medicare, Don't Privatize It, August 23, 2007 · Volume 7, Issue 33
  http://www.medicarerights.org/asclepios2007_33.html
· Extra Payments = Extra Profits, August 16, 2007 · Volume 7, Issue 32
  http://www.medicarerights.org/asclepios2007_32.html
· Cost-Effective Health Care, July 23, 2007 · Volume 7, Issue 28
  http://www.medicarerights.org/asclepios2007_28.html
· Preventing Waste and Abuse, May 31, 2007 · Volume 7, Issue 22
  http://www.medicarerights.org/asclepios2007_22.html
· Medicare Private Plan Overpayments: No Bang for the Buck, May 24, 2007 · Volume 7, Issue 21
  http://www.medicarerights.org/asclepios2007_21.html
· Extra, Extra? No More!, March 22, 2007 · Volume 7, Issue 12
  http://www.medicarerights.org/asclepios2007_12.html

Government Reports
· Medicare Advantage: Required Audits of Limited Value
  http://www.gao.gov/new.items/d07945.pdf
· Update on the Medicare Advantage Program and Implementing Past Recommendations
  http://www.medpac.gov/chapters/Jun07_Ch03.pdf
· Testimony: The Medicare Advantage Program and MedPAC Recommendations
  http://www.medpac.gov/documents/041107_Finance_testimony_MA.pdf
· The Medicare Advantage Program: Trends and Options
  http://www.cbo.gov/ftpdocs/78xx/doc7879/03-21-Medicare.pdf
· Medicare Advantage: Private Health Plans in Medicare
  http://www.cbo.gov/ftpdoc.cfm?index=8268&type=0

Issue Briefs
· Informed Choice: The Case for Standardizing and Simplifying Medicare Private Health Plans
  http://www.medicarerights.org/MRC-CHA_MAstandardization.pdf
· Medicare Private Health Plans vs. Medicare Savings Programs: Which Is the Better Way to Help
  People with Low Incomes Afford Health Care?
  http://www.medicarerights.org/MA_vs_MSP.pdf
· Too Good to be True: The Fine Print in Medicare Private Health Benefits
  http://www.medicarerights.org/MA_care_problems.pdf
· Cutting Overpayments to Private Medicare Plans Can Help Fund Children's Health Coverage
  http://www.cbp.org/pdfs/2007/0707_bb_medicare.pdf
· Curbing Medicare Overpayments to Private Insurers Could Benefit Minorities and Help Expand
  Children's Health Coverage
  http://www.cbpp.org/5-10-07health.htm
· Medicare Beneficiary Out-of-Pocket Costs: Are Medicare Advantage Plans a Better Deal?
  http://www.commonwealthfund.org/publications/publications_show.htm?doc_id=373489
· Testimony of David Lipschutz, California Health Advocates, before the Subcommittee on Health
  of the House Committee on Ways and Means, May 22, 2007
  http://waysandmeans.house.gov/hearings.asp?formmode=view&id=5966




© 2007-2008 Medicare Rights Center                                      www.medicarerights.org