USA Today: How Medicare Advantage Turned into a Boondoggle

Posted on by Karina

America's Affordable Health Choice's Act makes improvements in Medicare benefits, lower costs, and preserves choice for America's seniors while at the same time achieving new efficiencies in Medicare — expanding authority to fight waste, fraud and abuse and eliminating the wasteful Medicare Advantage subsidies to private insurance companies–money that can and should go back to seniors' care. USA Today’s editorial on Medicare Advantage details how cutting its wasteful subsidies will help pay for health insurance reform:

The private form of Medicare known as Medicare Advantage is enormously popular with seniors, and no wonder. Private Medicare plans offer extras such as vision care, dental benefits and even health club memberships that may cost more or not be available at all in the traditional fee-for-service Medicare that most seniors use.

It’s hardly surprising that almost a quarter of Medicare’s 45 million beneficiaries have signed up. It’s a sweet deal, underwritten by working Americans who subsidize those gold-plated private plans. Taxpayers help pay an additional $1,138 per beneficiary every year above the cost of fee-for-service Medicare to give Medicare Advantage beneficiaries all those extras. Even Medicare beneficiaries themselves kick in — they pay about $43 a year in additional premiums to help subsidize Medicare Advantage members.

It gets worse. The inflated costs of Medicare Advantage are hastening the bankruptcy of the overall Medicare system by an estimated year and a half…Overall, private Medicare plans cost an indefensible 14% more than traditional Medicare….

Bottom line? Like it or not — and at the outset we were optimists about Advantage — its promise has failed. Far from improving Medicare, it has turned into a wasteful taxpayer handout to uncompetitive insurers. Enjoying the largesse are companies such as Humana, for which Medicare Advantage is a profitable and growing enterprise. We asked both Humana and the industry’s trade organization, America’s Health Insurance Plans, to defend this system in an opposing view. They declined…

If there's anything in the medical system that's ripe for cutbacks, it's the wasteful subsidies in Medicare Advantage…

Cutting wasteful subsidies is exactly the right way to help pay for overhauling the health care system. If private companies can out-compete government-run health care, let them do it — without taxpayer handouts.

Learn more:

Learn more about the myths about seniors spread by opponents of health reform>>

Download a Health Insurance Reform Guide for Seniors (.pdf)>>

Learn more about how America's Affordable Health Choices Act will strengthen Medicare>>

Learn more about how America's Affordable Health Choices Act will improve the Medicare prescription drug benefit>>

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