Wayne O'Leary

Medicare is Dying: Where are the Democrats?

In a new history of corporations (“For Profit,” 2022), author William Magnuson magnanimously describes large business entities as the unintentionally beneficial conduits of 18th-century capitalist philosopher Adam Smith’s “invisible hand,” serving society indirectly through the individualistic pursuit of private profit. It’s a nice thought, the benevolent corporation, but other observers have taken a more jaundiced view of enterprise.

Novelist Raymond Chandler, master of the detective genre, had his creation, the hard-bitten private eye Philip Marlowe, put it this way in “The Long Goodbye” (1953): “That’s the difference between crime and business. For business you gotta have capital. Sometimes I think it’s the only difference.” Chandler, a former oil executive, presumably knew whereof he spoke.

The point of this little aside is that we’re presently witnessing a full-blown application of the Chandler/Marlowe thesis on commerce in the American healthcare “industry.” I’m referring to the explosive growth of Medicare Advantage, which is rapidly taking over the Medicare entitlement for seniors, destroying its integrity and turning what began as a pure public-insurance system into just another private business opportunity with inevitable fraud and abuse, albeit one subsidized by government. Worst of all, this is taking place under the collective nose, and with the evident approval, of the Democratic Party, supposed guardian of the cherished and admired program enacted as part of Lyndon Johnson’s Great Society in 1965.

Democrats are forever proclaiming their attachment to Medicare and defending it from Republican attempts to cut the program’s budget, raise its eligibility age, or sunset its provisions — proposals actually made by GOP senators during the recent midterm campaign. To their credit, I suppose, Democrats have resisted such immediately destructive scenarios, but they’ve been AWOL when it comes to the slow-motion creep of gradual destruction that’s been ongoing for years and is now reaching critical mass.

The most obvious manifestation of the disintegration of traditional Medicare is the year-end open-enrollment period, a borrowing from Obamacare, during which seniors are encouraged — harangued is a better word — on television by a motley collection of clownish performers (long-retired athletes, second-rate celebrities, unemployed actors) to abandon government-run Medicare in favor of private, profit-based plans managed by one of the major insurance companies. The pitch is far from subtle, suggesting duped retirees are somehow not getting benefits they’re entitled to or deserve and implying, falsely, that they can receive Medicare Advantage rebates on their Social Security premiums. Most can’t.

Why the Centers for Medicare and Medicaid Services (CMS) even permits such tawdry, deceptive advertisements is an embarrassing question that needs answering. Private-plan Medicare is being sold, with federal encouragement, like beer, pizza or the latest smart phone. Call the 800 number, goes the refrain, and you’ll be connected to a “licensed insurance agent,” (just the person you want explaining healthcare options), who will help select the best plan for you and, of course, for the represented companies — UnitedHealthcare, Humana, Cigna, Aetna, et al., that employ the agent with the help of government largesse.

In my home state of Maine, Medicare has gone one step better, allowing hospital chains to “collaborate” with selected insurance firms to slightly reduce payments for Medicare Advantage patients choosing the right “co-branded” company plans — a profitable win-win for the corrupted hospital, which locks in captive patients, and the corrupting insurer, which expands its guaranteed customer base.

The ride down this slippery slope began almost as soon as the Medicare program became law. First, the Reagan administration incentivized private insurers in the 1980s to contract with Medicare for managed care through HMOs. Next, in 1997, the Clinton administration created Medicare Part C, or “Medicare Plus Choice,” dividing the program into multiple financing and delivery systems, thereby allowing private provider organizations (HMOs, PPOs, medical-savings accounts) to receive government funds and compete with the original public program. Then, the Bush administration vastly expanded Part C in 2003, renaming it Medicare Advantage and adding the huge federal subsidies that enable insurers to reduce their administrative, advertising and premium costs while offering benefit enticements.

Finally, beginning in 2018, the Trump administration, using a presidential executive order, authorized a compliant, even enthusiastic, CMS to further bolster Medicare Advantage subsidies, encouraging insurers to add sign-up attractions like minimal dental care to their existing list of inducements (eyeglasses, hearing aids and gym memberships), in order to draw seniors away from traditional Medicare. This was done, proclaimed Donald Trump at a 2019 address to the Villages, a predominantly Republican retirement community in Florida, to protect the private-insurance industry from “socialism” and forestall such horrors as Bernie Sanders’ Medicare-for-All Act or his proposed enhancements to original Medicare.

With an open lane to offer extras not presently available under traditional fee-for-service Medicare, the private insurers have been able to use a hard sell to increase their share of senior customers despite charging added premiums for the supposed “free,” but often substandard, enticements. That, plus the growing taxpayer subsidies they receive (based on number of signed-up beneficiaries) has enabled the Advantage plans to seize an ever-expanding slice of the Medicare population — from 16% in 2006 to 33% in 2017 to 48% in 2022. Led by market-dominant conglomerates UnitedHealth and Humana, they now monopolize 55% of the entire Medicare budget and sit poised to co-opt and fully privatize the program within a few years.

Which brings us back to P.I. Philip Marlowe’s fictional observation about capitalist enterprise, that in many instances it uncomfortably borders on the criminal. Here’s what the current rise of Medicare Advantage has wrought: Patients choose among dozens of confusing and arbitrarily changing plan options, pay extra premiums and copays for pre-authorized doctor visits, and have limited provider networks with grudging access to referral-only specialists. Insurers, not physicians, approve treatments. The federal government (CMS), meanwhile, is subjected to overbilling (an estimated $12-$20 billion in 2020 alone), generated by fraudulently padded diagnoses, leading to multiple Justice Department lawsuits to recover taxpayer money gouged from the Medicare trust fund.

And what of the complicit Democrats, including the Biden CMS? A critical New York Times report (10/8/22) has highlighted their reluctance to rein in Medicare Advantage, which, its authors say, has been “increasingly embraced by [congressional] Democrats as well as Republicans.” Apparently, the party that created Medicare would prefer to coddle its wayward stepchild, accept the sleaze, and let the great unravelling proceed.

Wayne O’Leary is a writer in Orono, Maine, specializing in political economy. He holds a doctorate in American history and is the author of two prizewinning books.

From The Progressive Populist, January 1-15, 2023

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