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Privatization Scam Threatens to Replace Traditional Medicare Altogether by 2030

Medicare Advantage serves private health insurers and investors at the expense of the public interest.

A person in a mask holds a sign reading "No Medicare DIS-Advantage" while participating in an outdoor demonstration on January 9, 2023, in New York City.

Many Americans know Medicare Advantage as the Medicare program heavily advertised during its enrollment periods, including its special enrollment period that ended just last month. The incessantly repeated television ad for Medicare Advantage, which has often been narrated by 1960s quarterback Joe Namath, is full of disinformation — and it’s a profitable scam for health insurers. The disingenuously named privatized program has all kinds of disadvantages compared to the traditional Medicare program that dates back to 1965. Medicare Advantage could more accurately be called Medicare Disadvantage, based on its track record:

In 2016, the Trump administration instituted a new little-known federal agency, the Center for Medicare and Medicaid Innovation, which has been moving enrollees, often without their consent, to for-profit middlemen known as Direct Contracting Entities (DCEs). Rather than saving money and supposed greater efficiency, they add to the cost of coverage by taking their own cut of profits.

As a redesign of the DCE model, the Centers for Medicare and Medicaid Services (CMS) has allowed an expanded ACO REACH (Accountable Care Organization Realizing Equity, Access, and Community Health) program to start on January 1, 2023, with more than twice the number of DCEs. This is a corporate agenda being promoted and accelerated by CMS, with the ultimate goal to privatize and replace traditional Medicare altogether by 2030, without even a vote in Congress. Despite all those good words in its title — equity, access and community health — the 35-year track record of Medicare Advantage has failed on all of those counts. According to a 2021 in depth review of its experience, privatized Medicare Advantage plans have “failed to meet their primary objective of controlling costs while preserving the quality of care…. Risk score gaming is today necessary for business success in MA … [but] it is extremely costly to continue to ignore the corrosive, insidious effects of this defective risk adjustment system.”

The Big Five private health insurers (Aetna, Anthem, Cigna, Humana and United Health Group) already are being kept afloat at taxpayer expense. Overall, privatized Medicare and Medicaid account for more than one-half of the insurance giants’ annual revenue through overpayments. Beyond that, the private health insurance industry also receives about $685 billion a year in government subsidies, with that amount expected to double by the end of this decade.

Complaints to CMS about deceptive private sector marketing of Medicare Advantage more than doubled between 2020 and 2021. They led to an inquiry by the Senate Finance Committee that examined information from 14 states. The committee’s final report was damning. It found widespread television advertisements that claimed that seniors were missing out on benefits (even for higher Social Security benefits), that their physicians would be covered by their Medicare Advantage plans and avoided mention about access and cost problems. It also found that seniors shopping in local grocery stores were being approached by insurance agents asking them to switch their Medicare coverage over to a Medicare Advantage plan. Even worse, the committee learned that some insurance agents across states were changing vulnerable seniors’ and people with disabilities’ health plans without their consent!

It is clear from the above that Medicare Advantage plans fail patients, their families and taxpayers. This is a profit-driven scam serving private health insurers and investors at the expense of the public interest, and if perpetuated, could threaten the future of traditional Medicare, which has served our seniors well for some 57 years. We need to shine a bright light on this continuing scam and advocate for a widespread call to action for reform in this new year.

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