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Private insurers cherry pick Medicare patients

Medicare Advantage plans from the beginning have been advertised as better high-end coverage for elders at more stable premiums, based on receiving a per capita fee for each enrollee from the federal government.

Medicare Advantage plans sold by private, for-profit insurers were federally over-rewarded with a flat capitation rate for each enrollee. The government has been paying private insurers a flat rate for every enrollee for presumably the “best coverage.” In return private insurers were to provide comprehensive high-end coverage plus preventive care. People initially flocked to the programs.

After monitoring the program, the administration decided the per capita cost was too high and feds were over-paying insurers far more than the cost of conventional Medicare for the same care. Obama announced his intention to cut the program, but was dissuaded and ended up actually increasing the per capita rate to insurers for each Medicare Advantage enrollee.

Not surprisingly, insurers then figured out how to decrease coverage by selectively marketing to healthier elders, upcoding for higher risk-adjusted payments with raised capitation rates, and now insurers chase away patients who need more care by penalizing them with high co-pays, and deductibles for more serious health disorders. These individuals are dropping out of coverage for that reason.

The result is that private insurers are predictably successful in finding more ways to increase their profits, and at the same time lower the costs of covering the less healthy enrollees. Insurers already receive higher capitation rates for this population than they should. In addition, they are avoiding paying for elders having higher health costs than the capitation payments. It’s time to replace private insurers with our own single-payer national health program (Improved Medicare for ALL) covering all Americans, which would bring more equality, affordability and justice to health care.

— Richard A. Damon, MD, Bozeman

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