Pirates of the Medicaribbean | Guest Viewpoint

Corporations plunder Medicare and threaten to sink it

Lori Bernstein
Posted 6/7/23

Pirates are plundering our Medicare system.

But they’re not led by Johnny Depp. In fact, the “pirate gang” involves some of America’s biggest corporations. And, …

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Pirates of the Medicaribbean | Guest Viewpoint

Corporations plunder Medicare and threaten to sink it


Pirates are plundering our Medicare system.

But they’re not led by Johnny Depp. In fact, the “pirate gang” involves some of America’s biggest corporations. And, they’re working with the cooperation of the federal government.

How do they do it?

Let’s look at some facts.

Thirty million people, or over half of all Medicare beneficiaries, now have a private Medicare Advantage plan.

But “Medicare” Advantage is a misnomer. These plans have nothing to do with traditional, publicly funded Medicare at all. In fact, they’re nothing but private insurance plans.

The federal government pays the big insurance companies who sell Medicare Advantage plans a set amount for each person who enrolls, with higher rates for sicker patients. This is called “capitation.”

This system creates huge profits for the insurance companies. According to the New York Times (May 8, 2023), the government pays private, for-profit Medicare Advantage companies $400 billion a year.

But wait. It gets worse.

Because the insurance companies get more money for sicker patients, they’ve developed elaborate systems to make their patients appear as sick as possible, often without providing any additional treatment.

In other words, they defraud the government of the Medicare dollars we’ve paid into the system.

According to another New York Times article (Oct. 8, 2022), dozens of fraud lawsuits, inspector general audits, and investigations by watchdogs show that major insurance companies exploited the program to the tune of billions of dollars.

Eight of the 10 biggest Medicare Advantage insurers — representing more than two-thirds of the market — have submitted inflated bills, according to the federal audits. And four of the five largest players — UnitedHealth, Humana, Elevance, and Kaiser — have faced federal lawsuits charging that their schemes to overdiagnose their customers crossed the line into fraud.

And it gets even worse.

Top people in CMS (Centers for Medicare and Medicaid Services), the agency that oversees Medicare, ultimately get cushy jobs in the insurance industry, or even switch back and forth between the industry and CMS.

Marilyn Tavenner, a former CMS administrator, left in 2015, then ran the main trade group for health insurance companies. She was replaced by Andy Slavitt, a former executive at UnitedHealth. Jonathan Blum, the agency’s current chief operating officer, worked for an insurer after leaving the agency in 2014, and then became an industry consultant before returning to Medicare last year.

As a result, a program that was supposed to lower health care spending has instead become much more costly than the traditional publicly funded program it claimed to improve.

Now the ACO REACH program wants to apply this capitation system to traditional Medicare. Under ACO REACH, private, for-profit corporations can contract with the government to “manage” the care of traditional Medicare patients for a set amount per patient.

The plan is to have every Medicare patient under an ACO — the misnamed “accountable care organization” — by the end of 2030. Our own Jefferson Healthcare, for example, is already under an ACO.

The ACO REACH plan opens traditional fee for service Medicare to capitation, and therefore to the same incentives to fraud and abuse by giant corporations that exist in Medicare Advantage plans.

That’s why huge corporations are now buying up primary care practices, hoping to qualify for an ACO contract.

CVS Health, a national pharmacy chain and owner of Aetna insurance, paid $11 billion to buy Oak Street Health, a fast-growing chain of primary care centers that employs doctors in 21 states. In February, Amazon (!) closed a $4 billion deal to buy One Medical, another large doctors’ group that specializes in senior care.

If you want to learn more about the privatization of our Medicare system, the risks this creates for a vital health care program, and how you can take action to protect it, please join PSARA (Puget Sound Advocates for Retirement Action) at 5:30 p.m. Tuesday, June 13. The presentation will be held at Quimper Unitarian Universalist Fellowship in Port Townsend.

To register, go to psara.org and find the link on the homepage of our website.

(Lori Bernstein has lived in Port Townsend for 25 years where she’s worked as teacher, potter, and manager of an independent theater. She recently joined PSARA and is an activist in the healthcare justice movement, working with organizations including Whole Washington, National Nurses United and Progressive Democrats of America. If the trend toward privatization is allowed to continue, the Medicare Trust Fund will be depleted by 2031. With your help, she hopes to stop it.)


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