Today’s lesson in How Washington Really Works begins with a look at one of the red-white-and-blue Metro buses rolling around downtown.
Ignore the commuters inside, at least the ones going to work on Capitol Hill or the White House, where, supposedly, policy is made. They, and their bosses, are barely relevant to this story.
Focus instead on the lumbering vehicle’s exterior, where a full-color ad implores: “Support better health care for 17 million seniors. STOP THE NEW CUTS TO MEDICARE ADVANTAGE.”
Oh, no! Who’s out to get the elderly this time? It turns out that this scary but information-poor message is the outdoor advertising component of a health-insurance-industry campaign whose goal is to influence the spending of taxpayer dollars — but the ultimate audience for which is not our elected representatives, who ostensibly have the power of the purse. This is all about pressuring the bureaucracy. You might call it Mediscare 2.0.
Medicare Advantage (MA) is a $150-billion-plus-a-year program that pays insurance companies to enroll elderly and disabled clients in managed-care plans — unlike traditional Medicare, which reimburses health-care providers directly on a fee-for-service basis. About 16 million people participate in MA, roughly a third of the Medicare-eligible population. MA plans absorb a similar share of Medicare’s $450 billion annual outlays.
Intended as a more efficient alternative, MA has never quite lived up to this promise — at least not in any generally agreed-upon sense.
MA plans are often more user-friendly than traditional Medicare’s multiple hospital, physician and drug “parts.” Hence, MA enrollment has continued to grow despite the 2010 Affordable Care Act’s attempts to squeeze the programs in favor of expanding coverage for others.
Alas, since its origins in the early ’80s, MA has proven no more immune to perverse incentives and system-gaming than any of the government’s other health programs.
First, insurers cherry-picked healthier customers, who are less costly, and hence more profitable, to treat. Congress responded with new payment formulas to reward companies for accepting relatively sick customers. But this led to rampant “upcoding,” whereby MA plans find and report as many illnesses per enrollee as they can plausibly document.
Last fall, the Department of Health and Human Services released a comprehensive analysis showing that MA costs grew faster than they would have under fee-for-service between 2004 and 2013 — and that only upcoding, not patient demographics or other neutral factors, could explain this.
A complete market-oriented overhaul of the entire Medicare program is a political nonstarter, of course, so the bureaucrats in charge of MA yank on the policy levers that Congress gave them. HHS has repeatedly tweaked the MA payment formula since 2010, trying to claw back money that would otherwise be lost to upcoding.
The announcement of each tweak triggers a “comment period” during which industry and the public can weigh in, as required by the federal Administrative Procedure Act. HHS rolled out its latest adjustment on Feb. 20 — which brings us back to our buses.
Sponsored by the Better Medicare Alliance, a new group spearheaded by large insurance companies, the ads create the appearance of a popular uprising — and, perhaps, even a smidgen of a real one — against HHS’s proposed payment trim. Never mind that it’s slightly smaller than last year’s. With Congress paralyzed, and regulators correspondingly making more decisions, lobbyists are retooling to bombard bureaucrats using methods first tested on lawmakers.
The Better Medicare Alliance didn’t even exist a year ago; previously, the health plans’ broader trade association handled the MA payment issue. A new, dedicated MA group, with its own dollars to spend, is accordingly motivated to prove itself. “It’s like a debutante’s ball,” jokes Joseph Antos, a Medicare expert at the American Enterprise Institute.
Already, the group has elicited the obligatory letter from 239 members of Congress, from both parties, telling HHS of their “serious concern” over the “significant threat to the health and financial security of seniors in our congressional districts.”
This is mostly bluff, since Congress long ago delegated the MA payment formula to the agency. Still, HHS can’t just ignore Congress, or the barrage of e-mails, orchestrated and otherwise, that the Better Medicare Alliance is encouraging.
As it happens, HHS has almost always adjusted its proposed new MA payment formula in favor of insurers by the end of the comment period, which will be April 6 this year. Taken together, the tweaks have increased co-pays and the like somewhat for patients, as the Better Medicare Alliance protests, but so far not seriously enough to imperil MA.
This year’s campaign to save the seniors has a certain ritualistic quality to it, in light of that history.
One wonders whether the inevitable difference-splitting couldn’t be accomplished more cheaply, and with a lot less drama — or what would happen if the resources being spent to manufacture outrage over a supposed threat to “17 million seniors” were devoted instead to promoting structural reforms to make Medicare and other entitlements sustainable for everyone.