MEDICARE PRIVATIZATION CAN’T BE FIXED; IT MUST BE ELIMINATED

Note: If you find my posts too long or too dense to read on occasion, please just read the bolded portions. They present the key points I’m making and the most important information I’m sharing.

The private health insurers in America have been working for decades to privatize Medicare, our public health insurance for all seniors, so they can profit from this large public funding stream. If we want to improve quality and control costs in our health care system, the privatization of Medicare must be stopped and rolled back. This and two other posts summarize:

  • The history and background of Medicare and efforts to privatize it (this previous post),
  • The unsuccessful efforts to control the costs and improve the quality of the privatized Medicare Advantage plans (this previous post), and
  • What needs to happen to save Medicare (this post). [1]

Theoretically, the problems of cost, quality, and access to health care services that arise with the privatized Medicare Advantage (MA) and Direct Contracting (DC) programs can be fixed with technical changes in laws and regulations. However, these approaches have been tried in the past without success. Some of the practices the MA and DC companies use to increase their revenues and profits are illegal. The Department of Justice has filed lawsuits against large MA providers for their “upcoding” gamesmanship to get more revenue per enrollee (see this previous post for more details). However, even lawsuits are unlikely to solve this problem permanently. And it won’t solve the gaming of the Medicare payment system in other ways.

The lengths the MA insurers will go to protect their profits was underscored by their active opposition to improving Medicare by adding hearing, vision, and dental benefits as was proposed by the Build Back Better Act. Recognizing that a more level field of competition from an improved public Medicare program was a threat to their profits, they engaged in a multi-million-dollar public relations campaign against the enhanced Medicare benefits. Despite the private sector’s rhetoric about believing in competition, in health care (as elsewhere) private providers do NOT want competition from the public sector on an even playing field. This is evident here with MA insurers and it was evident in the development of the Affordable Care Act (ACA) when private health insurers opposed and killed the inclusion of a public, Medicare-like option among the subsidized health insurance alternatives in the ACA marketplaces.

Both the MA insurers and the new DC entities are private companies that will pursue profits relentlessly. They can be constrained only by government regulation, which is extremely difficult if not impossible to implement effectively. Moreover, doing so would be costly and therefore inefficient. These corporations are timeless and soulless legal entities that have shown through past behavior that their only commitment is to maximizing profits. The MA insurers have shown time after time that they will find ways around government regulations or ways to game the regulations for their profit.

The delivery of key societal services, such as health care, by the public sector, i.e., government, is not only fairer and more compassionate than delivery by the private sector, it is also more efficient, effective, and streamlined. The private sector’s profit motive adds costs (i.e., profits, advertising, and administrative overhead) and incentivizes cost-cutting, often through denying needed services and cutting corners on quality. Furthermore, the private sector has no incentive to address inequality, bias, or discrimination; its only goal is to maximize profits.

To reverse the scourge that Medicare privatization has clearly become, and that is exacerbated by Direct Contracting, we need to assert strong public control over Medicare. This can and should be done by changing or reversing past policy decisions.

The privatization of Medicare is an example of the extreme capitalism that has come to dominate the U.S. economy. Bob Kuttner wrote about this in his powerful and poignant article analyzing the history of capitalism in our democracy. [2] (I summarized his article in this previous post.) This hyper-capitalism, as he calls it, includes the privatization and/or deregulation of important public services and public goods, including health care and health insurance.

Based on historical experience, Kuttner concludes that nothing short of full public control will stop the private sector’s relentless drive to capture – and profit from – Medicare spending. This large, public funding stream, currently $800 billion and projected to double by 2028 as more baby boomers become Medicare-eligible, is seen by private sector capitalists as a tremendous, irresistible profit opportunity.

Kuttner notes that without strong and effective public constraints capitalism evolves into an extreme form (which he calls hyper-capitalism) that serves wealthy individuals (i.e., plutocrats) and large corporations but leaves everyone else behind. This is antithetical to the ideals and principles on which our democracy was founded – equal opportunity for all, including the ability to realistically pursue happiness and a good life through access to health care and true freedom to make important life choices, such as where to live and work. These ideals and principles, as well as the public goods and basic societal functions that effectuate them, can only be ensured by an assertive government of, by, and for the people, not one that’s controlled by the plutocrats and wealthy corporations for their benefit.

A first step for saving Medicare is to eliminate the Direct Contracting privatization option created by the Trump Administration. Over 50 Democratic members of Congress, along with Physicians for a National Health Program (a  membership organization of 24,000 doctors and other health professionals), are calling on the Biden Administration to eliminate the Direct Contracting Medicare privatization program. A majority of the 53 current Direct Contracting companies are investor owned (i.e., owned by private equity or hedge fund vulture capitalists not by a health insurer or a healthy services provider). They are allowed to spend as little as 60% of their Medicare payments on patient care with the rest going to profits and overhead. So far, the Biden Administration has only paused the most extreme form of DC, while letting the other DC pilot programs proceed, despite questions over their legality. [3] [4]

I urge you to contact President Biden and ask him to eliminate the Direct Contracting Medicare privatization scheme. You can also let him know that you support reducing and eventually eliminating other Medicare privatization, while strengthening the public Medicare program. You can email President Biden at http://www.whitehouse.gov/contact/submit-questions-and-comments or you can call the White House comment line at 202-456-1111 or the switchboard at 202-456-1414.

I also urge you to contact your U.S. Representative and Senators to let them know that you support elimination of the Direct Contracting Medicare privatization scheme. You can also let them know that you support reducing and eliminating Medicare privatization, while strengthening the public Medicare program. You can find contact information for your U.S. Representative at  http://www.house.gov/representatives/find/ and for your U.S. Senators at http://www.senate.gov/general/contact_information/senators_cfm.cfm.

[1]      Caress, B., 1/24/22, “The dark history of Medicare privatization,” The American Prospect (https://prospect.org/health/dark-history-of-medicare-privatization/)

[2]      Kuttner, R., 12/1/21, “Capitalism vs. liberty,” The American Prospect (https://prospect.org/politics/capitalism-vs-liberty/)

[3]      Johnson, J., 2/3/22, “Warren warns, ‘Corporate vultures’ circling Medicare on Biden’s watch,” Common Dreams (https://www.commondreams.org/news/2022/02/03/warren-warns-corporate-vultures-are-circling-medicare-bidens-watch)

[4]      Johnson, J., 2/16/22, “Physicians slam industry push to ‘fix’ – not end – Medicare privatization scheme,” Common Dreams (https://www.commondreams.org/news/2022/02/16/physicians-slam-industry-push-fix-not-end-medicare-privatization-scheme)

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