Campaigners Beat 'Greedy' Insurance Giants Exploiting Medicare Advantage

As insurance companies' stock fell 6-12% on Tuesday in response to the Biden administration's Medicare Advantage announcement, one healthcare campaigner celebrated that the U.S. government didn't cave to the "greedy" industry's pressure.

"The private insurance industry is used to getting its way, but this year we out-organized them," declared Aija Nemer-Aanerud, the People's Action Health Care for All campaign director.

Medicare Advantage (MA) plans are an alternative to traditional coverage under the federal health insurance program for people with disabilities and those age 65 or older. They are administered by private insurance companies known for denying patients necessary care and overcharging the government, which costs taxpayers up to $140 billion extra each year.

"We urge President Biden to do more to rein in abuse of the Medicare program by private corporations."

The Centers for Medicare & Medicaid Services (CMS) announced Monday that "payments from the government to MA plans are expected to increase on average by 3.7%, or over $16 billion, from 2024 to 2025. The federal government is projected to pay between $500 and $600 billion in Medicare Advantage payments to private health plans in 2025."

First unveiled in January, the 3.7% is higher than what campaigners wanted. Last week, Alex Lawson of Social Security Works and Brittany Shannahan of Public Citizen delivered to the White House around 28,000 petition signatures urging President Joe Biden to "reduce MA rates to a level commensurate with traditional Medicare and recoup all overpayments."

However, the rate is also far less than what insurers and industry groups were demanding—and, as Reuters noted Tuesday, the decision was a departure from the norm, as CMS "typically raises the final reimbursement from the advanced notice."

"Medicare is one of the most popular government programs because it delivers healthcare to people when and where they need it," said Nemer-Aanerud. "Private insurance companies like UnitedHealthcare spent millions in advertising and lobbying in Washington to demand more of our public money for privatized, so-called 'Medicare Advantage' plans."

The People's Action leader pointed out that "we countered their lobbying by helping people share their stories with lawmakers about how Medicare Advantage plans harmed them by denying care when they needed it most."

"We commend the Biden administration for listening to our people and refusing to cave to the insurance lobby's demands," the campaigner added. "We urge President Biden to do more to rein in abuse of the Medicare program by private corporations and reinvest public funds into expanding and strengthening traditional Medicare."

As private insurers have grown their MA businesses, "concerns about the cost of the program have been rising for years from wonkier corners of Washington," Bloomberg's John Tozzi reported Tuesday. According to his newsletter:

"We went years without the advocacy community really paying attention to it," says Wendell Potter, who left a career doing public relations for health insurers to become an outspoken critic of the industry.

That shifted over the last year or two, he said, as a loose group of advocates coalesced around the issue... Potter said advocates now get face-to-face meetings with top Biden administration officials about the issue.

Potter partnered with Congresswoman Pramila Jayapal (D-Wash.)—a leader in the fight for Medicare for All, a single-payer healthcare system that would cover everyone nationwide—for a Newsweek op-ed published just before the CMS announcement.

The pair took aim at the insurance industry's "disinformation campaign" about what they call "Medicare (Dis)Advantage."

"First off, the industry claims that Medicare Advantage plans reduce costs. But this is simply not true," Potter and Jayapal explained. "And it gets worse. While Big Insurance touts the coverage Medicare Advantage plans provide, the reality is Medicare Advantage plans often provide worse coverage than traditional Medicare."

They wrote that "another important characteristic of Medicare Advantage plans is their aggressive use of tools to delay and deny care such as prior authorization, which is seldom used in traditional Medicare, and rarely for services like physician-administered cancer treatments (no one wants chemotherapy if they don't need it)."

"Medicare Advantage plans also drive health inequalities, contrary to Big Insurance claims," they continued. "And the industry's biggest and boldest piece of disinformation is that Medicare Advantage plans will be forced to cut benefits if the government stops massive overpayments that have been padding corporate profits for decades."

"This is wholly false," they stressed. "And you want to know how we know? Because we have reduced overpayments before."