Hastert Sneaks in Benefits for Illinois Insurance Company Increasing Medicare Waste on HMO’s

The last minute tax and trade package passed by Congress last weekend included provisions affecting Medicare which weren’t reported until today. Dennis Hastert slipped in one provision to help an Illinois insurance company. Under previous law Medicare beneficiaries were locked into a plan for the year with limited ability to switch until March 31. The insurance company pushed for a change to allow Medicare beneficiaries to switch to Medicare Advantage plans any time during the year.

While on the surface it sounds like this might offer more choice there are a few problems. Senators from both parties protested that this was slipped in by Hastert without going through the normal legislative process. Insurance companies with Medicare Advantage programs engage in high pressure sales tactics on elderly Medicare patients who do not understand what is being pushed on them. I have had many patients wind up signing up for Medicare Advantage programs without really understanding what they were signing.

The major problem is that Medicare Advantage plans are a wasteful transfer of taxpayer’s money to the insurance companies. The Commonwealth Fund recently published a study showing that the provisions in Bush’s Medicare plan to provide extra payment to Medicare HMO’s is costing 5.2 billion per year. Even though Medicare Advantage plans typically cherry pick the healthiest patients, it costs $922 more per year to treat those in Medicare Advantage plans than those in the traditional government-run program. The Commonwealth Fund commented that this money could be better spent on improving the drug benefit to eliminate the donut hole, eliminating the annual problem of the current formula calling for reductions in physician reimbursement, or to reduce the Medicare premium for beneficiaries by ten dollars per month.

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