Medicare Choices of Seniors

RIGHT FOR THE WRONG REASONS.

by Shannon Brownlee

As much as it pains me to say it, President Bush may have been right to veto legislation that delayed Medicare pay cuts for doctors by cutting payments to Medicare Advantage plans, but he was right for the wrong reasons. The legislation reverses a mandatory 10.6 % pay cut for doctors, and it finds the money to do so by reducing reimbursements to private Medicare Advantage plans. That last bit is the part to which the White House objected. Medicare Advantage plans cover about 20 percent of Medicare beneficiaries, and in 2006, the federal government paid $59 billion to these plans ?- an estimated $7.1 billion more than it would have paid if the care had been delivered under fee for service. President Bush said, "I support the primary objective of this legislation, to forestall reductions in physician payments. Yet taking choices away from seniors to pay physicians is wrong."

Taking money away from Medicare Advantage is the wrong thing to do, but not because it reduces "choice" for Medicare recipients. Medicare Advantage, which pays a premium to health maintenance organizations, preferred provider organizations, and so-called private fee-for-service plans, was originally enacted 25 years ago to encourage the growth of HMOs. It was intended to help true staff model health maintenance organizations, like Kaiser and Group Health Cooperative of Puget Sound, which deliver high quality care - and have high patient satisfaction - for lower costs. And at first, that's who signed up to participate in Medicare Advantage. Now, practically any old insurance plan that calls itself managed care can qualify, and a lot of the plans that participate are better at managing profits than making sure providers deliver high quality care.

Instead of cutting Medicare Advantage payments across the board, Congress should think about being more selective. Why not make it harder to qualify for Medicare Advantage? Get rid of the riffraff. The Centers for Medicare and Medicaid Services should be bolstering the market position of true HMOs and other efficient group practice models, like Intermountain Healthcare and the Mayo Clinic. These systems have trouble growing and moving into new markets, in part because employers and patients don't judge providers on the basis of the quality or efficiency of care they deliver. Why not give a boost to systems that do a better job for less?

Posted by SBrownlee on 8/12/08
The American Prospect