Health insurers often try to influence Washington through quiet persuasion in plush offices. To fight potential government cuts for private Medicare plans, however, they’ve hit the streets.
The Obama administration has proposed reducing what insurers collect for Medicare Advantage plans — HMOs and PPOs, mainly — that cover about 15 million seniors. (Regular Medicare, which still covers most seniors, pays doctors and hospitals directly.)
The rate change, part of the Affordable Care Act, is the next step in winding down a subsidy that pays Medicare Advantage plans substantially more than what traditional Medicare costs. Proponents say the move will end what they call an industry windfall and pressure insurers, hospitals and doctors to deliver care more efficiently.
The industry, which maintains the cuts will raise costs and reduce consumer benefits, has launched a massive national counterattack, running numerous “seniors are watching” ads, getting beneficiaries to pepper politicians with calls and letters, and lobbying the administration to back off.
The final 2015 Medicare Advantage rates are expected to be released Monday. Here are some common questions about the controversy.
“For a lot of these vulnerable Democrats, one, they need the seniors. Two, there’s a lot of money that could go for or against them” in November, depending on what the administration does Monday, said Lee Drutman, a lobbying expert with the Sunlight Foundation, a Washington-based organization focused on government transparency.
A spokesman for America’s Health Insurance Plans, the main industry lobby, said the effort is its “largest-ever mobilization.” Industry critic and former insurance executive Wendell Potter said it may be the biggest insurance publicity campaign since the “Harry and Louise” ads, which helped undermine the Clinton administration health-reform effort in the 1990s.
“It’s a big deal. It’s huge,” she said of Monday’s expected announcement. “2015 earnings are very, very dependent on what the rates look like.”
Lower government payments would induce them to offer fewer Medicare Advantage plans and raise costs for members, they say.
Last year, similar pressure on payments caused “reductions in benefits, increases in out-of-pocket costs and changes in provider networks,” said Ignagni. “A number of seniors are living in areas where they’ve had a reduction in choice” of plans. Others see little change.
While some carriers withdrew from some markets, others expanded. The number of Medicare Advantage plans stayed about the same from 2012 to 2013, according to the Medicare Payment Advisory Commission.
“Enrollment growth suggests that Medicare Advantage continues to be attractive,” said Gretchen Jacobson, associate director of the Kaiser Family Foundation’s Medicare policy program. (KHN is an editorially independent program of the foundation.)
A new paper by economists from the University of Pennsylvania's Wharton School finds that the higher rates HHS pays for Medicare Advantage contribute more to insurer profits and advertising spending than consumer benefit.
“It doesn’t seem obvious to me that we should do any delaying in the cuts on Medicare [Advantage] reimbursement,” said Mark Duggan, one of the authors. “It appears that it will cause minimal adverse effect to consumers.”