by James Parks, Feb 28, 2008

Supporters of the Bush administration’s Medicare reform have touted private plans as being a big bargain for seniors. But the truth is that the private plans, known as Medicare Advantage, cost seniors more, congressional investigators say.  

The New York Times reports today that a study by the Government Accountability Office (GAO) found many people in private Medicare plans face higher costs for home health care, nursing homes and some hospital stays than the traditional government-run Medicare program. In fact, the report shows the government will spend an estimated $54 billion in extra costs for Medicare Advantage beneficiaries from 2009 through 2012.

About one in five of the 44 million Medicare beneficiaries—9 million people—are in the private Medicare Advantage plans.

Edward Coyle, executive director of the Alliance for Retired Americans, says the 3.5 million-member retiree organization has heard “countless stories from seniors about how their Medicare Advantage programs have ultimately cost them more or failed them in their time of need.”

It has already been documented that Medicare Advantage plans cost taxpayers 12 percent more than traditional Medicare and that all Medicare beneficiaries have had to foot the bill, paying an additional $2 on top of their already rising premiums to subsidize these private insurance companies.

Even though private insurers claim they protect Medicare beneficiaries against high out-of-pocket costs by setting annual limits, the GAO found thousands of Medicare Advantage recipients were in plans that are projecting higher costs for home health services and inpatient services. On top of those increases, many of the annual cost limits don’t include some cancer drugs, some mental health services and home health care expenses.

Among the more than 25,000 people who responded in the AFL-CIO Health Care for America Survey, many said Medicare Advantage plans cost them more. Like Dick from Florida, who says:

We tried a Medicare Advantage plan and found out the agents had lied to us about certain hospitals being covered. Many doctors would not take the plan, and we had to pay extra dollars because they were outside the network. In total, we paid almost as much as for the secondary plan we had before, and had to drive many more miles to get doctors that took the plan. [We were] very unhappy and went back to the secondary plan.

Says Coyle:

For the GAO to independently, definitively show that these plans are more expensive for most beneficiaries leaves no other explanation for continuing these overpayments than that the president has consciously decided to sacrifice older Americans’ health care needs for the profits of large corporations.

Rep. Pete Stark, (D-Calif.), chairman of the Ways and Means Subcommittee on Health, told the New York Times:

Medicare overpayments fatten company profits, even as many seniors face higher costs in private plans than they would in traditional Medicare.

While private insurers are charging more for Medicare, the Bush administration is trying to slash benefits for Medicare recipients by $91 billion over five years. Bush’s final “lame-duck” budget proposal targets hospitals and other health care providers. Most of the Medicare savings in the budget would be achieved by reducing the annual update in federal payments to hospitals, nursing homes, hospices, ambulances and home care agencies. 

Coyle says Bush is  

attacking  the most vulnerable—seniors who need Medicare to afford to see a doctor—while at the same time giving billions in subsidies to insurance companies to run privatized Medicare plans. And while many retirees continue to pay more for their prescriptions, the administration bans Medicare from negotiating volume discounts with the big drug companies. Is this what Bush meant by being a “compassionate conservative?”

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