Who’s Footing the Bill for Medicare Advantage Plans?

by   |  December 07, 2007

Here’s a hint: us. In 2003, the Republican-controlled Congress passed so-called “Medicare Advantage” – a law allowing private insurance companies to provide seniors with a private plan as an alternative to traditional Medicare benefits. There is only one problem. The Congressional Budget Office subsequently found that private plans are paid an average of 12 percent more, or $1,000 a year, to cover a Medicare beneficiary than traditional plans. According to AFSCME’s recent testimony to the U.S. House, “Over the next 10 years, these overpayments to insurance companies will cost an additional $160 billion” to taxpayers. Think about it: $160 billion in subsidies to private insurers. Subsidies that could be used, among other things, to improve prescription drug benefits or expand the State Children’s Health Insurance Program (SCHIP) so that it covers more children from low-income families. Meanwhile, Medicare participants are forced to pay higher premiums for their coverage. Even with these windfall subsidies many of these private plans, which claim to be better than traditional Medicare, don’t deliver on their promises. As the independent Government Accountability Office found, Medicare Advantage often doesn’t provide access to providers and is a bad deal for the seniors who need the most care. This is but one of the reasons why AFSCME opposes Medicare privatization and supports the repeal of these overpayments. For more information on Medicare Advantage, visit this special section at AFSCME.org.