LOOK AT THOSE...

LOOK AT THOSE GAMS! The new site, she shore is purdy! Thanks to our heroic editors, Sam and Ann, for all the work they've done getting us here today. And thanks to the failures and malign behavior of private insurers, for giving me so much to write about (see that transition! So smooth!). An article in yesterday's New York Times detailed the misbehavior of private fee-for-service options in Medicare. These plans, which were greenlighted in order to inject some of that oh-so-awesome competition into the entitlement, got a nice, ahead-of-the-curve write-up in TAP's December issue. There, Urban Institute Medicare expert Bob Berenson explained the scam:

Initially, the private plans were paid only 95 percent of what it would have cost to care for the average beneficiary in traditional Medicare (private plans are more efficient, remember?). Taxpayers were to pocket the 5 percent savings, and plans were still supposed to have enough left over to provide additional benefits, including much better prescription drug benefits than those now provided under the new Medicare Part D drug benefit...[But] the government consistently lost money, even in the halcyon days when it was keeping 5 percent. The private insurers understood that the surest way to increase profits wasn't to increase efficiencies but to avoid patients with serious or chronic health problems. In Medicare, 5 percent of beneficiaries account for nearly half of spending in any year. Because health plans cherry-picked healthy enrollees, they made money, while traditional Medicare kept the sickest -- and costliest -- patients.By the late 1990s, amid the backlash against managed care, HMOs and other managed care plans had given up whatever advantage their stinginess had engendered in holding down health-care costs. In 1997, the Republican Congress threw them a lifeline: They created aprivate fee-for-service option that could impose Medicare's payment schedules on hospitals and physicians. In other words, Republicans invested private entities -- the insurance companies -- with the authority to use governmental regulatory powers over other private entities, all in order to further disadvantage traditional Medicare. At the same time, however, they modestly reduced Medicare's overpayments to the private health plans. Many plans then withdrew from Medicare and dropped beneficiaries. Others stayed in the game but made the extra benefits they offered less generous.

The Medicare Modernization Act -- otherwise known as the bill that created Medicare Part D -- only made things worse. Taxpayers are now paying private insurers 119% what they pay traditional Medicare to treat seniors. And they're overpaying in order to....keep seniors out of Medicare. It's an exquisite example of the private market being propped up by Republican-led corporate welfare even as it falters and underperforms against government competition. The New York Times article takes all this a step further, and details the massive fraud and misinformation campaigns insurers are deploying to get seniors into their private options. The elderly are being pressured, seeing their signatures forged, and occasionally being enrolled after death. A favored trick of insurance salesmen is to enter ethnic communities where the residents speak poor English and browbeat them into signing up. And then the plans often leave their members in the lurch, not covering needed prescriptions, treatments, or favored providers. This, of course, is what you'd expect from salesmen seeking profits through volume: Aggressive sales techniques, even if their product isn't a particularly perfect fit. Only in this case, a bad fit can bankrupt or injure a patient, and it costs us taxpayers more -- with no better outcomes or benefits -- than the expansive service provided by the government. Why, exactly, are we subsidizing such a bad deal?--Ezra Klein