Medicare Advantage: Insurers get a pay bump

Americans in privately run Medicare plans caught a break earlier this month, said Maya Goldman in Axios. Dr. Mehmet Oz, the head of the Centers for Medicare and Medicaid Services, announced that the government will increase average Medicare Advantage payments by 2.48%, or more than $13 billion, in 2027. That’s a big improvement over the 0.09% raise initially proposed in January. Insurers will also benefit from a decision to pause a proposed overhaul to Medicare’s risk-adjustment model, which pays more for covering sicker patients. It means benefits should remain steady for people in Medicare Advantage, which allows seniors to choose private insurance plans that are covered by the government. Some providers “said the pay boost still doesn’t reflect economic realities,” with the rising costs of “drugs, supplies, and more patient visits stoking medical inflation.” But there is growing “bipartisan concern over how much” the popular program is costing taxpayers.

The $13 billion handout “sits oddly with the Trump administration’s performative chainsaw-wielding claims about reducing spending,” said Brett Arends in MarketWatch, because it rewards a program that is “grossly inefficient.” The Medicare Payment Advisory Commission, an independent government watchdog, says that the government spends 14% more—$76 billion—for Medicare Advantage enrollees than it would if those beneficiaries were enrolled in traditional Medicare. After saying he was going to hold those costs down, Trump is back-sliding in favor of the “big insurance companies, most of them listed on Wall Street.”

Medicare Advantage enrollment numbers keep rising because the program works, said The Wall Street Journal in an editorial—by “using market competition to improve care for seniors” and, yes, restrain spending. Overall Medicare spending was $431 billion less over the past decade than the Congressional Budget Office projected in 2010, “even as the share of beneficiaries in Advantage increased by half.” A Trump plan to expand Medicare Advantage further by automatically enrolling seniors in private insurance plans would “reduce Medicare waste, fraud, and abuse.” But Democrats—who prefer government-run health care—are opposed.

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Trump himself has labeled health insurers “as fat cats that need to be reined in,” said Bob Herman in Stat News, yet “his policies are enriching them.” He threatened “to demand lower premiums” from health insurance companies in December but never did. Now lobbying letters reveal that the largest Medicare Advantage insurers “pressured the Trump administration not to move forward with its risk adjustment proposal,” which would have “led to more accurate, and lower, payments.” There was no justification for the pause “other than industry resistance,” analysts say. And in the end, the insurers got “exactly what they wanted.”