Villagers Learned What Is Happening to Medicare & Medicare Advantage

MEDICARE ADVANTAGE PLANS – SPEEDING TOWARD PRIVATIZATION $350 BILLION WASTED ON SUBSIDIES TO PRIVATE INSURERS

Talking Points

The Congressional and Executive branches have been on a 35-year flight from budgetary accountability for funding our Medicare program to what they have been convinced is the best solution, privatizing Medicare. This flight reveals that so far over $350 billion of federal taxpayer money has been paid to insurance companies, wasted on subsidization of private insurers for selling Medicare Advantage (MA) plans.

In 2018 Congress amended the “Bi-Partisan Budget Act of 2018” (BPBA), and thus delivered a low blow that confirms our assertion and declares Congresses’ and the White House’s intentions to privatize Medicare. The BPBA created benefits and the Center for Medicare Services (CMS) authorized MA plans to spend $16.5 billion more in 2019 and 2020 for MA plan benefits available to 34% (20 million) enrolled in MA plans but NOT for 66% (38.8 million) enrolled in traditional Medicare A&B plans. MA enrollees with asthma will get home care but traditional A & B enrollees won’t!

Clearly, based on the Congressional Budget Office (CBO) October 5, 2017 analysis, privatization will not lower the cost of health care, instead it will shift 18% of the federal tax burden and health care costs to seniors while protecting the health care provider and pharmaceutical industries.

MedPAC, the independent congressional agency created by Congress to advise them on issues affecting the Medicare program, reported on March 15, 2019…“We project the base benchmarks (that is, excluding quality bonuses) will average 103 percent of traditional Medicare Fee for Service (FFS) spending, and the payments, excluding, quality bonuses (and coding differences), will average 98 percent of FFS spending in 2019.” According to MedPAC bonuses would add about 2.4 percent to the 98 percent.

This report said benchmarks without quality bonuses added would average 103 percent in 2019. MA plans are more expensive per enrollee than traditional Medicare.

So, why not fix traditional Medicare, strip out the cost of subsidies? Health and Human Services (HHS) is wasting taxpayer’s money and cheating over-age 65 Americans.

FEDERAL SUBSIDIES PAID TO MA PLAN INSURERS ARE UNWARRANTED!

THEY SHOULD BE STRIPPED OUT NOW RATHER THAN LATER WHEN INSURERS WILL BE ABLE TO INCREASE PREMIUMS, DUDUCTIBLES AND COINSURANCE AT WILL IN ORDER TO MAINTAIN THEIR 5% + PROFIT MARGIN!

MA private insurer plans carry a 12-15% overhead and profit burdens and have failed to compete without federal subsidies. Traditional Medicare has a much lower 3% overhead burden. MedPAC reported that MA plan insurers made a 5% margin in 2016, twice the average of Medicare plans overall. That’s 25% better than the healthcare industry’s 4% margin reported by Standard and Poor’s.

The Kaiser Family Foundation (KFF) data from 2017 records indicate that Medicare A & B payments to MA plan enrollees were 9.9% higher than payments made to traditional Medicare (FFS) enrollees. It is time to derail Medicare privatization.

Strip subsidies and then determine if private insurers can offer a better deal or not, on a level playing field. Current data says not! Are they competitive with Medicare FFS or not? If not, dump them and go after FFS cost reduction; take on doctor and hospital costs, Pharma, product manufacturers and others – install an across the board competitive bidding discipline and toughness that has always been needed.

The NRLN Asks Congress and the Executive Branch to:

• Grandfather and protect the 20 million seniors (34%), who have purchased MA plans in good faith, from future reductions in benefits and guarantee the protection of baked in subsidies as of December 31, 2019 and all future MA subsidies, rebates, rewards, bonuses and non-traditional Medicare plan benefits combined.
• Direct Government Accountability Office (GAO), CBO and the HHS Inspector General to investigate and report on MA and Original Medicare Part A and Part B independent financials and assess and publicly disclose the cost effectiveness of MA, with and without taxpayer subsidies (rebates, risk adjustments and star bonuses).
• Retract the 2019 and 2020 subsidies for home air filters and carpet shampooing for asthma patients, pay for heart healthy meals for those with heart disease and other services that represent a shift from services that prevented, improved or cured a patient’s conditions, to services determined by what a chronically ill patient needs, or make them available to the original Medicare A & B, FFS enrollees who have the same health conditions and needs.
• Reduce the $140 billion annual wrong and improper payments generated by all federal agencies (particularly the $85 billion attributable to Medicare and Medicaid). Sequester savings and use them to eliminate the 75-year deficits of Medicare Part A and Part B, then Part D. Payroll tax increases are an option.

House Passes Three Drug Bills NRLN Supported

The U.S. House of Representatives passed on May 16 three prescription drug bills supported by the National Retiree Legislative Network (NRLN). The bills passed were:

H.R. 1499, Protecting Consumer Access to Generic Drugs Act of 2019, is intended to prohibit the practice of “pay-for-delay,” in which brand name drug companies compensate generic drug makers to delay the entry of lower price generic drugs into the market. H.R. 1499 creates a civil penalty to further discourage “pay-for-delay” agreements between name brand drug companies and generic drug makers. According to a Federal Trade Commission, these anti-competitive deals cost Americas $3.5 billion annually in higher drug prices.

H.R. 965, CREATES Act (Creating and Restoring Equal Access to Equivalent Samples Act) targets abusive delay tactics used by brand-name pharmaceutical companies to block market entry of more affordable generic drugs. H.R. 965 is intended to provide an efficient path for generic drug manufacturers to obtain samples of the branded product so the generic company can perform the testing necessary to show that its product is equivalent to the brand-name product. The Congressional Budget Office has estimated that the CREATES Act will result in a $3.9 billion net decrease in the federal deficit over 10 years. Savings to consumers and private insurers likely would be far greater.

H.R. 938, BLOCKING Act of 2019 (Bringing Low-Cost Options and Competition while Keeping Incentives for New Generics Act of 2019) would increase competition in the generic drug market. Current law awards 180 days of exclusivity on the market to a drug manufacturer when it is the first to file a generic drug application with the FDA for a drug for which there is no generic. The 180 days begins once the manufacturer starts marketing the drug, but some manufacturers “park” the exclusivity before receiving final approval, blocking competition for more than the 180 days intended by the law. H. R. 938 would stop first generic drug “parking”.

The NRLN was the first retirees’ advocacy organization back in 2009 to lobby for legislation to prohibit “pay-for-delay” and other cost saving actions, including allow Medicare to do competitive bidding for prescription drugs and the importation of lower price drugs that meet the FDA safety standards.

Our most recent effort to end pay-for-delay was the NRLN’s Legislative Action Planning Committee’s (LAPC) request that I write a letter to House Speaker Nancy Pelosi requesting that she call for votes of H.R. 1499 and H.R. 938. Alyson Parker, NRLN Executive Director, emailed my May 8, 2019 letter for Speaker Pelosi to Wendal Primus, Senior Health Policy Adviser to Speaker Pelosi, who has been heading House Democrat negotiations on prescription drug bills.

Alyson, Ed Beltram, NRLN VP – Communications, and I met with Mr. Primus during our February fly-in to Washington, DC. We presented our prescription drugs whitepaper and expressed our alarm that Medicare Advantage plans provided by private insurers are receiving taxpayer subsidies to provide benefits that participants in traditional Medicare do not receive. We oppose this effort by Congress to privatize Medicare.

On March 7, 2019, at the LAPC’s request, I sent a letter to Representative Frank Pallone (NJ-06) Chairman of the Energy and Commerce Committee to request that he call for a committee vote on H.R. 965. All three prescription drug bills passed by the House came out of Chairman Pallone’s committee.

Passage of the three prescription drug bills were consolidated into H.R. 987, Strengthening Health Care and Lowering Prescription Drug Costs Act. The bill also included measures to strengthen the Affordable Care Act (Obamacare). Some Republican House members who voted against the bill have been quoted in news articles that they believe H.R. 987 will not be passed in the Senate, where the Republicans have a majority, because of the ACA provisions included in the bill.

The NRLN will monitor the bill in the Senate and, if necessary, issue an Action Alert in an effort to support the prescription drug price reductions.

Most NRLN members probably are aware that the NRLN is an advocate for reducing the cost of prescription drugs. However, you are probably not aware of how far back our lobbying on this issue goes. On July 22, 2009, I sent a letter to Peter R. Orszag, who was White House Budget Director during the first term of President Obama. The letter, in part, stated:

I believe that Americans could be provided with immediate health care savings if the White House would urge Congress to enact legislation to:

1. Allow the full importation of safe, less expensive prescription drugs from countries certified by the Federal Drug Administration.
2. Adequately fund the FDA to properly oversee prescription drug imports.
3. Sufficiently staff the FDA to reduce the backlog of generic drugs and streamline the process to bring generic drugs to the market in a timelier manner, and fund these activities through fees from the drug companies.
4. Implement competitive bidding for prescription drugs by the Centers for Medicare and Medicaid Services, including establishing a national formulary. Competitive bidding has proven to be very cost-effective for participants in the Veterans Administration health care program and it can achieve similar results for the CMS.
5. Advise President Obama to direct the Attorney General to take legal action against drug companies that collude verbally or by contract to control pricing or subvert free market practices by paying off generic manufacturers for withholding the introduction of generic drugs until brand name patents expire or for any other reason, a.k.a. “pay-for-delay or “reverse payments” deals.
6. Ask the Congressional Budget Office to conduct a study to determine the cost savings to be gained from these actions.

The NRLN will continue to lobby for legislation to reduce the cost of prescription drugs because on it is important to our members and all Americans.