By NSCLC's Oakland Office

A health care safety net for seniors is unquestionably a great thing—but what happens when the net catches private insurance companies instead?     

Industry lobby groups are up in arms over the House’s passage of the Children’s Health and Medicare Protection (CHAMP) Act, a bill to that would reauthorize the State Children’s Health Insurance Program and shift Medicare spending away from private insurance companies and toward traditional, fee-for-service Medicare. Karen Ignagni, leader of America’s Health Insurance Plans, claims that the bill “shreds the safety net for millions of seniors.” 

She is referring to those enrolled in so-called “Medicare Advantage” plans that provide private insurance coverage as an alternative to original, fee-for-service Medicare. Enrollment in these plans has exploded since Congress enacted the Medicare Modernization Act (MMA) of 2003, which increased federal subsidies for private Medicare health plans. Thanks to the MMA, private insurers now get paid an estimated 112% of what the government spends to cover the medical costs of someone on original, fee-for-service Medicare. The program has generated huge profits for insurance companies, not surprisingly. 

Given this extra subsidy, it makes sense for insurers to push their Medicare Advantage products. They have done so with a vengeance. As enrollments have increased, so have complaints about misleading, fraudulent, and abusive sales and marketing tactics. This summer the Senate Special Committee on Aging heard testimony about instances of wrongdoing by private plans that ranged from to soliciting door-to-door in violation of federal regulations, to private agents falsely representing themselves as government representatives, to outright forgery of consumers’ signatures on Medicare Advantage applications.

Even absent fraud, many seniors simply sign up for Medicare Advantage plans without understanding the (very complicated) fine print. Later they find out that signing up for the plan hardly gave them an “advantage.” They may have trouble getting needed medical care because their long-time doctor accepts original Medicare, but not the new private plan. Or they may discover when they get sick that the lower premiums offered by their Medicare Advantage plan are offset by higher charges for hospitalization. 

When examining the subsidies provided to plans and the questionable benefits to beneficiaries, it begins to look like the safety net that is getting shredded is protecting insurers, not beneficiaries.

In contrast, the CHAMP Act would strengthen a real health care safety net for seniors and individuals with disabilities. It would gradually decrease the extra subsidies to Medicare plans offered by insurance companies and use that money to improve the general Medicare program by, among other things, increasing coverage of preventive and mental health services.

For the poor and vulnerable seniors whom we represent at the National Senior Citizens Law Center, parts of the CHAMP Act targeted specifically toward low-income and minority Medicare beneficiaries are particularly good news. Almost $11 billion dollars would go toward making it easier for low-income seniors and individuals with disabilities to qualify for programs that help pay for Medicare premiums and prescription drug costs. For instance, current law prohibits anyone with more than $10,210 in savings from qualifying for the Low Income Subsidy for the Medicare prescription drug program. The CHAMP Act would lift the asset limit for individuals to $17,000, and increase it annually starting in 2010. More people could get affordable drug coverage without having to deplete modest life savings. 

The products Medicare Advantage sponsors are peddling, whether good or bad, are not a safety net. A safety net never has to trick seniors into signing up. A safety net provides help when things go wrong, when money is stretched too thin, when choices must otherwise be made between paying for food or filling a prescription. That is exactly what the CHAMP Act would do for millions of low-income Medicare beneficiaries.