A Bunch of Lefty Billionaires Spent Millions Attacking Medicare Advantage... and No One Cares

There was an off and on again series of articles about the public Part C Medicare health plan program along the lines that it wastes billions of "taxpayer dollars" (allegedly even more than the billions wasted by Original Medicare) and does not do a good job for the beneficiariesis. The source was a far left wing organization called the Center of Integrity funded by far left wing billionaires. But no one other than the far left wing Columbia Journalism Review and left-wing Yahoo.com web site paid any attention to the articles.

 

The major problem with the Center's reporting and analysis may account for the fact that no one else in the press or in government thinks the claims are newsworthy. The Center for Integrity does not seem to understand how Medicare works and in particular seems to make no distinction among the various parts of the public Part C Medicare Advantage program--for example, special needs plans vs. PPOs vs. HMOs. (Or the Center is purposely misleading his readers by not pointing out important distinctions.)

 

For example, its work is full of veiled accusations about the American Health Insurance  Plan (AHIP) lobby. The core of the accusations is that this lobby is doing something nefarious in supporting the  public Part C Medicare Advantage program. ( It is a lobby after all so one would expect such support and not find it particularly newsworthy. Also as other blog posts on my blog attest, I am not fan of AHIP.) But more important, almost all of the members of the AHIP group sell and administer (more administer than sell) all types of insurance, to both Medicare beneficiaries and people not yet Medicare beneficiaries. Public Part C Medicare Advantage plans are a relatively small part of most of their businesses (after all, less than 5% of the people in the United States subscribe to such plans).

 

In doing their selling and  administering, in general the companies "make" about 5% "profit¹" for that work.

• They make about 5% administering public Part C Medicare Advantage plans (see 2011 Profits Similar to Projections for Most Plans, but Higher for Plans with Specific Eligibility Requirements, GAO, December 2013).
• They make about 5% selling private Medigap supplements to Medicare beneficiaries who have FFS Medicare instead of Part C.
• They make about 5% administering FFS Medicare as Medicare Administrative Contractors.
• They hope to make about 5% selling Obamacare insurance.
• They make about 5% administering large employers' group insurance plans, both for the employers' current employees and their retirees.
• They make about 5% selling insurance to small groups.
• They are starting to get involved administering Medicaid programs and plan to make 5% doing that as well. 

 

It is absolutely irrelevant to them which of these buckets you fall into because some of the AHIP member companies do all of the above and most of the members do at least two or three of the above. Do you really think there is something newsworthy in "exposing" an industry with an about 5% margin concerning 5% of its market?

 

¹ "Make" and "Profit" and in quotes above because many of these companies are non-profits and the 5% becomes future reserves and are closely monitored by whomever regulates charitable organizations in a given state.