Now is the time of year when seniors are inundated with fliers and advertisements from private health insurance companies who are hoping to woo their Medicare dollars, which the companies have found to be very profitable. And next week is the time when seniors and others can vote on two very different plans for Medicare -- President Obama's plan to preserve and strengthen Medicare, and the Romney/Ryan plan to dismantle traditional Medicare by giving vouchers to seniors to buy their own health insurance from private companies.
Private insurance companies have been depleting Medicare. More than $282 billion have been wasted in overpayments to insurance companies in the Medicare program over the past 27 years, according to a recent study by Drs. Stephanie Wool handler and David Himmelstein, professors at Harvard University and New York University.
Much of this excess payment has gone to Medicare Advan tage plans in the past eight years. These plans are administered by private insurance companies, instead of government, as in traditional Medicare. Overpay ments to these private companies date to the Bush era, when the insurance industry induced President Bush and Congress to add bonus payments to Medi care Advantage plans. Medicare pays these private plans a "premium" based on a prediction of how costly an enrollee's care will be (the average in 2012 is $10,123).
This year the government is overpaying these plans by $2,526 per Medicare Advantage enrollee. That is $2,526 more per enrollee than in traditional Medicare. Sure, the beneficiaries are getting some extra benefits (like gym memberships), but these are paid by all taxpayers (payroll taxes and general revenues) and by patients paying premiums into the traditional Medicare program. These extra benefits are highly inequitable because they're paid by everyone, but only granted to individuals in the Medicare Advantage programs.
In spite of the fact that these private plans cost the taxpayers more, Republican vice presidential candidate Paul Ryan has proposed a dramatic expansion of private Medicare plans. He has criticized President Obama for cutting these overpayments to private insurance companies in the Affordable Care Act, overpayments that are a part of the $716 billion Obama has proposed cutting from Medicare. The Affordable Care Act does not cut medical benefits for seniors, which is a distortion propagated by the Romney and Ryan campaign.
In addition to demanding these overpayments for premiums, private insurers have ex ploited loopholes to gain even more overpayments, beyond the cost of insuring their enrollees. For example, private insurers receive the full premium for veteran enrollees, even for those who get free care at the veteran's hospitals. The insurance companies double dip, with our taxpayer dollars.
Private insurance companies selectively market to the healthiest, lowest-cost seniors, even though their private plans are being paid much more than the traditional Medicare program. Traditional Medicare includes a disproportionate share of chronically ill patients, which contributes to the depletion of the Medicare trust fund.
A study published in the New England Journal of Medicine found that "the healthy go in, and the sick go out" of these private Medicare plans. In addition, private insurers have quickly learned how to game the Medi care risk-adjustment system, in which Medicare pays more money for certain diagnoses, by enrolling seniors with mild cases that require little or no treatment.
This is what Mitt Romney and Paul Ryan are failing to tell seniors in their obfuscatory statements about their intentions for Medicare, should they be elected. Their wish is to further privatize Medicare, and to give vouchers to seniors to enter this confusing marketplace to buy insurance, vouchers that would not keep pace with rising premiums, and would leave seniors with ever-increasing out-of-pocket costs. In their misplaced faith in the health insurance marketplace, which this study shows wastes Medicare funds, Romney and Ryan are jeopardizing the physical and fiscal health of millions of seniors.
It is time to end Medicare's experiment with privatization, instead of increasing the useless involvement of for-profit private insurance companies. They provide no health care, just administration of the Medicare government funds, which can be done more cheaply by traditional Medicare. Administrative costs for private insurance plans average 17 percent, whereas Medicare's administrative cost is less than 2 percent. This high overhead for private plans implies that a significant reduction of clinical care is being delivered to patients by Medicare Advantage plans. The $280 billion wasted on overpayments to private Medicare Advantage plans could have been used instead to improve benefits for seniors, or to extend the life of the Medicare Trust fund by more than a decade, say Woolhandler and Himmelstein.
Based on these facts, the differences between the candidates and parties are very clear. A vote for Romney and Ryan is a vote for further privatization and waste in the Medicare program. A vote for Scott Brown as senator could well be the vote that gives control of the Senate to Republicans who want to privatize and destroy Medicare. Brown opposes Obama's Af ford able Care Act, the law that will prolong the life of the Medicare trust fund without cutting benefits to seniors. Eliza beth Warren, the Democrat who is running against Brown, supports Obama's health care law.
Medicare is at stake for everyone in this election. Be sure to vote on Tuesday.
Dr. Susanne King is a Lenox-based practitioner.