Medicare Advantage, private insurance paid by Medicare costs Medicare 15% more than government run fee-for service Medicare. The government run program is more efficient than the private HMOs. September 27, 2009 Editorial Medicare Scare-Mongering It has been frustrating to watch Republican leaders posture as the vigilant protectors of Medicare against health care reforms designed to make the system better and more equitable. This is the same party that in the past tried to pare back Medicare and has repeatedly denounced the kind of single-payer system that is at the heart of Medicare and its popularity. For all of the cynicism and hypocrisy, it seems to be working. The Republicans have scared many older Americans into believing that their medical treatment will suffer under pending reform bills. The general public believes that, too. The latest New York Times/CBS News poll of 1,042 adults found that only 15 percent believe changes under consideration would make the Medicare program better, while 30 percent think they would make it worse. That does not mean that Medicare will be untouched under the DemocratsÃ¢â¬â¢ plans. The Obama administration and Congressional leaders are hoping to save hundreds of billions of dollars by slowing the growth of spending in the vast and inefficient Medicare system that serves 45 million older and disabled Americans. The savings would be used to help offset the costs of covering tens of millions of uninsured people. Ã¢â¬Â¢ But far from harming elderly Americans, the various reform bills now pending should actually make Medicare better for most beneficiaries Ã¢â¬â by enhancing their drug coverage, reducing the premiums they pay for drugs and medical care, eliminating co-payments for preventive services and helping keep Medicare solvent, among other benefits. The main exception, a fully justified one, is that some of the 10 million people enrolled in private plans that participate in Medicare Ã¢â¬â the Medicare Advantage program Ã¢â¬â might suffer a dilution or elimination of the extra benefits they get that other beneficiaries do not. To help them compete against the traditional Medicare fee-for-service program, Congress granted these plans large overpayments, essentially subsidies. Most are required to use part of the subsidy to reduce charges to their beneficiaries or to add extra benefits, such as vision and dental benefits, or even gym memberships. This often makes them a better deal for beneficiaries. But it is unfair to force those enrolled in traditional Medicare to help foot the bill Ã¢â¬â currently $43 a year extra for each participant Ã¢â¬â to help subsidize the private plans. Federal taxpayers have contributed heavily as well. These private plans didnÃ¢â¬â¢t start out costing the government more. For most of the 1980s and 1990s, the assumption was that private health maintenance organizations could do a better job of coordinating care and saving money than the government. The private plans were paid 95 percent of what the same services would cost in traditional Medicare with an assumption that even that money would allow them to deliver extra benefits. Then after budget cuts imposed in 1997 drove many private plans to drop out of the program, Congress steadily raised their payments. Today Medicare pays the private plans, on average, 14 percent more than the same services would cost in traditional Medicare. The bill being considered by the Senate Finance Committee is projected to cut the subsidies to Medicare Advantage companies by more than $100 billion over 10 years. Although Republican rhetoric has triggered fears that Medicare Advantage enrollees might lose their coverage entirely if private plans drop out of the system, the real effect of the bill would likely be modest on average. The value of an enrolleeÃ¢â¬â¢s added benefits would shrink by more than half from current levels but would not disappear; they would still be worth about $500 a year in 2019. Douglas Elmendorf, the director of the Congressional Budget Office, told the committee that, under the bill as proposed by the committee chairman, he expected that almost all Medicare Advantage plans would continue to operate and almost all of their current enrollees would stay enrolled. Total enrollment in Medicare Advantage would creep up by 200,000 over the next decade Ã¢â¬â that is, about 2.7 million fewer new enrollees than expected under current trends, a real chance for savings. What the Republicans arenÃ¢â¬â¢t saying Ã¢â¬â and what the Democrats clearly arenÃ¢â¬â¢t saying enough Ã¢â¬â is that in important ways, coverage for a vast majority of Medicare recipients, those in traditional Medicare, should actually improve under health care reform. The House legislation, the only bills in near-final form, would reduce and ultimately eliminate a gap Ã¢â¬â the so-called doughnut hole Ã¢â¬â in Medicare drug coverage that currently forces more than three million beneficiaries to pay for drugs entirely out of their own pockets once they hit specified spending levels. That would also benefit many other beneficiaries who pay high premiums for coverage in the gap that they never end up using. The House bills would also waive deductibles and co-insurance for preventive care that can head off serious illness, expand eligibility for programs that assist low-income beneficiaries and provide incentives for doctors and hospitals to coordinate care, improve quality, and lower costs. All that should benefit many if not most Medicare beneficiaries. And delivery system reforms should benefit the private plans as well. Republican opponents have also been warning that planned cuts in payments to hospitals and other health care providers might make them less willing or able to serve Medicare patients. If true, that is a problem that Congress will have to address in the future. Ã¢â¬Â¢ We have long championed Medicare. And we believe elderly Americans, and all Americans, should closely examine the proposed health care reforms. But the Republicans have done far too good a job at obscuring and twisting the facts and spreading unwarranted fear. It is time to call them to account. President Obama and the Democrats in Congress have to make the case forcefully that health care reform will overwhelmingly benefit Americans Ã¢â¬â including the millions of older Americans who participate in Medicare.