Insurance Companies Rip Medicare Off for $282.6 Billion
Source credit: Entertainment Money
An upcoming International Journal of Health Services study reveals that Medicare has massively overpaid private insurance companies under the Medicare Advantage program and its predecessors over the past 27 years. The authors, Drs Hellender, Himmelstein and Woolhandler, come up with a startling $282.6 billion in excess payments, most of them in the past eight years. In 2012 alone, private insurers are being overpaid $34.1 billion, or $2,526 per Medicare Advantage enrollee. Instead of being used to improve patient care, shoring up Medicare’s trust fund or reducing the federal deficit, these funds have gone to stockholder dividends and the exorbitant salaries paid to insurance CEOs.
The article appears at a time when some lawmakers, including vice presidential candidate Paul Ryan, have proposed a dramatic expansion of private Medicare. Private Medicare plans – previously referred to as Medicare HMOs and now called Medicare Advantage plans – have been in existence for about three decades. Medicare pays these privately run plans a set “premium” per enrollee for hospital and physician services (averaging $10,123 in 2012). However the study’s authors find that private insurers exploit loopholes to garner overpayments above and beyond what it costs them to care for their enrollees. For example, Medicare gives private insurers a full premium for each enrollee, even for those who get most of their care for free at the Veterans Health Administration.
In addition, private insurance plans cherry-pick by selectively recruiting the healthiest seniors whose care will cost much less than the premiums they generate for the company. As the article concludes, both Republicans and Democrats who championed Medicare HMOs in the eighties and nineties argued that “market-based” privately financed Medicare would be more efficient and save money. In fact the opposite is the case. As with privatized prisons, charter schools, public water systems and private military contractors like Blackwater and Halliburton, this is yet another form of corporate welfare – another way to bilk taxpayers out of hundreds of billions of dollars to increase CEO salaries and shareholder dividends. Health-care CEOs had the highest median pay of any industry in the 2010 The Wall Street Journal CEO Compensation Study.
The US is the only country in the world where insurance companies have inserted themselves, as finance brokers, into the doctor-patient relationship. It’s time to end the health care rip-off by totally removing private insurance from the health care equation. We can only do this by repealing ObamaCare and replacing it with a publicly funded and administered single payer health care system like all the other industrial companies enjoy.
Yet another great reason to vote for Green Party candidate Dr Jill Stein on Tuesday November 6th.
Read full study here