Insurance industry spends millions fighting cuts to Medicare Advantage

  • Article by: JIM SPENCER , Star Tribune
  • Updated: April 6, 2014 - 9:35 PM

It’s spending millions fighting cuts to Medicare Advantage, the private plan alternative for seniors.


March 7, 2014: Don and Elizabeth Dersch of Chester, Va., chose Medicare Advantage, a private plan, over traditional Medicare when they both became eligible. The government is now reducing what it pays private plans.

Photo: Khue Bui, New York Times

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– The ad features a picture of an elderly man peering through a pair of binoculars.

It comes with a warning: “Seniors are watching,” the headline says.

Paid for by the nation’s health insurance industry, this ad and other industry-sponsored publicity have appeared across the country in recent weeks as part of a multimillion-dollar lobbying strategy designed to curtail proposed cuts to Medicare Advantage, the private health plans sold as alternatives to traditional Medicare.

The issue weighs heavily in Minnesota. Half of the state’s Medicare-eligible residents are covered by private insurance, the highest rate in the country. At the same time, Minnetonka-based UnitedHealth Group covers 3 million Medicare Advantage participants in 44 states, more than any other insurance provider.

Health insurance companies characterize their lobbying blitz as a wake-up call to 16 million elderly Americans who could lose easy access to care, be forced to change doctors or face higher premiums as national health reform requires government reimbursements to Medicare Advantage to come more in line with traditional Medicare payments.

“Last year, we saw a 6 percent cut to payments,” said Robert Zirkelbach, spokesman for America’s Health Insurance Plans, the industry trade group directing the lobbying effort. “Seniors have faced disruption in their coverage because of last year’s cuts.” Adding to them this year will create more serious disruptions, Zirkelbach charged.

But researchers at the nonpartisan Kaiser Family Foundation say that, for now, grim predictions “are not panning out.” Despite last year’s cuts, Medicare Advantage enrollment is still growing rapidly; health insurance companies are not abandoning the market in significant numbers, and premiums have risen slightly but remain relatively stable.

“Plans are still able to operate profitably and service the Medicare population,” said Tricia Neuman, director of the Kaiser Family Foundation’s Medicare policy program.

Critics of the insurance industry’s strategy call the new ad campaign and associated political pressure a scare tactic by companies that are currently overpaid with public dollars. In 2013, Medicare Advantage cost the government roughly 10 percent more per patient than traditional Medicare, according to the Medicare Payment Advisory Commission.

“They’ve been overpaid the last few years and that’s being corrected,” said Joe Baker, president of the Medicare Rights Center, a nonprofit that helps seniors get coverage. “These dire predictions are a case of Chicken Little saying ‘The sky is falling.’ ”

With final rules on 2015 Medicare Advantage payments due from the government on Monday, Minnesota customers are vexed.

Medicare Advantage “is a customer-friendly program,” said Malcolm McCutcheon, a 78-year-old retired physician living in Duluth. “I don’t ever see a bill.”

Instead, as it does for almost all Medicare Advantage recipients, the government pays his insurance company a set fee to provide his health care.

Satisfied, yet concerned

McCutcheon is “ambivalent” about the government’s proposed cut in that fee, which an industry-paid consultant says will be $25-$35 per month. As a consumer, he is very satisfied. As a taxpayer, he understands that Medicare Advantage now costs more than traditional Medicare.

“I would like to see Medicare provided in the least expensive way,” McCutcheon said.

Meanwhile, UnitedHealth Group continues to work against the cuts. The company’s UnitedHealthcare subsidiary reacted to last year’s Medicare Advantage reimbursement reductions by reducing the number of doctors in provider networks in 10 states.

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