Lev Radin/Sipa USA
Retired New York City municipal workers protest a scheduled replacement of their traditional Medicare benefits with Medicare Advantage Plus, February 14, 2022.
One of the real dangers to the use of government to help ordinary people—the core proposition of the Democratic Party since the New Deal—is creeping privatization. A program is nominally public, but for-profit companies worm their way in, making the program less efficient and more confusing. Because it’s still branded as a public program, the government takes the fall. (Can’t government do anything right?)
Exhibit A is health insurance. A in this case stands for Medicare Advantage, a sneaky program of for-profit health plans that bill Medicare and use the Medicare brand but fragment the system and add costs.
The latest report of the Medicare Payment Advisory Commission warns that 46 percent of the 62 million Medicare beneficiaries now use these private plans, and that the percentage will exceed 50 percent by next year. In other words, original, public Medicare will soon constitute a minority of the program, and on the current track it will continue to shrink rapidly.
Medicare Advantage was added in 1997, supposedly as a way to increase consumer choice and save the government money. The savings never materialized, and in fact Medicare Advantage drastically restricts consumer choice.
Unlike conventional Medicare, a Medicare Advantage plan ostensibly provides more coverage of items like prescription drugs, hearing aids, and eyeglasses. But standard Medicare allows free choice of doctors and hospitals, while Medicare Advantage products are strictly “managed.”
This means access to providers is rigidly restricted, and many medical needs that are covered in theory are denied in practice. Medicare Advantage companies also target their marketing to relatively healthier seniors. The result has been a kind of “death spiral” for public Medicare, as the government shoulders the burden of the oldest, sickest seniors.
This comes on top of the use of the Medicare brand for so-called Medicare Part D, drug insurance sponsored by private insurance companies (who have done nothing to hold down spiraling drug costs)—another insidious form of Medicare privatization.
Now comes an even more dire threat. The Biden administration has continued much of a Trump-era plan that encourages insurers to become “Direct Contract Entities.” This means they function as payment intermediaries between Medicare and the doctors and hospitals that provide care. It shifts the insurance function to for-profit companies, and privatizes what remains of traditional Medicare.
By contrast, America’s other great universal program, Social Security, never let the privatizers get their foot in the door. So Social Security is still public, universal, efficient, simple to use, and a credit to government.
Privatization is an insidious slippery slope. Privatize some parts of a public program and the government is well on the way to privatizing all of it. Costs to government go up, and into the pockets of intermediaries. The savings come in the form of denied care. The first step toward efficient and universal health coverage is to purge Medicare of all its commercial parasites.
