Obstruction Boosts Insurance Fat Cats

Senate conservatives went into their customary obstruction mode again late Thursday, choosing to protect the interests of insurance companies while shortchanging the health care needs of older Americans and ignoring the will of the majority.

Thirty-nine conservatives [1] supported a filibuster of a bill, passed overwhelmingly by the House [2], that would prevent a 10.6 percent cut in the reimbursement rate for doctors accepting Medicare patients starting July 1. To offset the cut, the bill would have trimmed taxpayer subsidies to insurance companies participating in the Medicare Advantage program. A bipartisan majority in the Senate supported the bill, but the usual coterie of block-and-blame conservatives played their "Dr. No" role [3] as they have since the beginning of the term.

Medicare Advantage, instituted at the behest of conservatives who want to ultimately privatize Medicare, cost taxpayers $7.1 billion more in 2006 than it would have cost of its participants were in the traditional fee-for-service Medicare program, The Government Accountability Office found in a February report [4]. One reason, the GAO says, is that on average only 87 cents of every dollar spent on Medicare Advantage actually go to health care; the rest goes for administrative and marketing costs—and, of course, insurance company profit.

The bill, HR 6331, would have shifted $14 billion over five years from the insurance companies in Medicare Advantage so that Medicate fee-for-service doctors would be properly reimbursed for their costs. Without that shift, no doubt thousands of the 600,000 doctors now participating in the Medicare program would simply stop accepting Medicare patients. The Bush administration issued a veto threat, and the block-and-blame conservatives in the Senate lined up behind it.

The Medicare Advantage program was sold as an alternative to the what conservatives considered unnecessarily high costs in fee-for-service Medicare, but as The New York Times reported in May [5], Medicare Advantage has quickly developed its own, predictable trail of waste and inefficiency:

... Generous federal payments to private Medicare Advantage plans — set by law — have created a “tremendous incentive” for insurers to maximize sales by aggressive marketing. ... The report says insurers often encourage agents to sell these products by paying larger commissions and bonuses than agents would receive for selling other health insurance products.

The resulting mish-mash of confusing plans, oversold at times by zealous marketers, is a bad deal for taxpayers. Keeping the program as it is will cost an additional $54 billion through 2012, the GAO said, and while some of that money does help pay for some services that are not covered under traditional Medicare, it's right to ask why taxpayers should be subsidizing insurance companies when it is demonstrably more cost-effective for traditional Medicare to provide those same services.

But this is what we get with blind ideology. The next time a conservative inveighs against government waste, ask them about Medicare Advantage and that $54 billion, and ask why Senate conservatives are so determined to keep that particular bit of waste on the books.