As is usually my habit, I was killing time online just before midnight last night, when I received a message from my friend Pete. I have known Pete for roughly 30 years. He lives in China and works as a managing director of a high-end electrical component repair firm, so any missives I receive from him are highly valued.
Pete and I were having a brief discussion (on his lunch hour) on matters related to music. He made a passing reference to the late folksinger Phil Ochs and what he might have written about over the last quarter century had he been alive, given our pockmarked political landscape. Pete went on to ask ”why people went to jail for the S&L crisis [back in the '80's], but not for this one”. My answer was simple: when the same people writing the checks that keep you alive write the mandatory minimum laws, the chances you go to jail become slim.
Since the 1980’s, corporate donors have insured that their interests are protected above all others, which explains a great deal about the system we’re currently barely enduring. Aside from banking, the insurance industry has been feeding at the taxpayer trough for decades without repercussions.
Two recent studies, one by the OIG and one by an independent firm, specifically addresses the monumental payments to the insurance industry in the form of the Medicare Part C program. Often referred to as ”Medicare Advantage” (we have learned the hard way to whom the ”advantage” belongs), Part C was originally devised to provide benefits above and beyond what was offered by traditional Medicare programs. in the intervening years, we have seen poaching of healthy populations, duplicate payments that belonged to other health care programs and the over-reporting of patient acuity for the purpose of gaining illicit reimbursement.
The first study was conducted by a group called Physicians for a National Health Program, an 18,000-strong group of health care providers whose aim, based on their name, is fairly clear. The study attempted to quantify the amount of dollars overpaid to Part C plans since their inception in 1985. The amount, based on their breakdown of the totals, is $282.6 billion, with most of that coming in the past eight years since the passage of the Medicare Modernization Act, with enrollment in these plans having risen to over 13 million beneficiaries.
The second report came from the OIG, and was another in their occasional series looking at risk adjustment data submitted by Excellus Health Plan in 2007. Part C plans are paid a bonus if they can prove that their population is sicker than that of other plans. As with every other study of this type, the OIG found that Excellus over-reported diagnostic acuity in 46% of the beneficiaries studied, which resulted in an estimated overpayment of $41.6 million for 2007. The results reflect only one carrier, and only one year of data, but the pattern, based on past reports of this type, has long been established.
If we combine the findings of these two studies with the fact that traditional Medicare is now providing coverage for many of the preventive services that used to be reserved for patients under a Part C plan, we find a program that has outlived its usefulness and is costing taxpayers inordinate dollars in improper payments.
Many different ideas have been brought to the table with regard to health care reform, but none of them include jettisoning Medicare Part C for what appears to be obvious savings. Unfortunately, the current federal campaign financing system appears rigged to benefit the very industries overfeeding at the taxpayer trough. If I was overpaid $282.6 billion from my bank, I’d be in a private prison. When the insurance industry is overpaid the same amount, it’s business as usual. These facts alone redefine the idea of “insurance”. As for the rest of us, as Phil Ochs once said, “A white flag in my hand/and a white bone in the sand/and it seems that there are no more songs”.