While Congress and the White House battled over the State Children’s Health Insurance Program, the cost of federally subsidized private Medicare plans soared, with increasing reports of unscrupulous practices that target older adults. If lawmakers and the president are really interested in containing costs, they will turn their attention to Medicare Advantage programs.
The federal government has taken some steps to combat abuse, but reports of deceptive marketing and overzealous sales tactics continue. Abuses include door-to-door policy sales, which Medicare regulations prohibit, and even the forging of signatures.
“It’s the wild, wild West out there,” Mary Jo Hudson, director of the Ohio Department of Insurance, told the Wall Street Journal.
In 2006, the federal Medicare program was extended to include coverage for prescription drugs – Medicare Part D. Those eligible for coverage can choose stand-alone drug coverage or a privately run Medicare Advantage program that offers broader health benefits and prescription coverage. The federal government pays insurance companies about $9,000 a year for each person enrolled in a private plan. Agents earn commissions of as much as $600 for each enrollee.
According to the New York Times, low-income residents and older adults in rural areas are particularly vulnerable to the hard-sell tactics. A lawyer in Camdem, Ala., told the Times that many enrollees in the private plans have sixth- or seventh-grade reading skills or are illiterate.
It’s a good deal primarily for the agents and the insurance companies. The Congressional Budget Office reports that Medicare payments for beneficiaries enrolled in private Medicare Advantage plans are higher than what the program would spend if those beneficiaries were in the traditional fee-for-service program. Taxpayers pay an average 12 percent more for the privatized program.
For the enrollees, the private plans don’t always offer the extra benefits offered. Some beneficiaries discover they have less flexibility and fewer benefits than what traditional Medicare provides.
What was sold as better service at a lower cost has proved otherwise.
It’s time for the federal government to take a closer look at privatized Medicare.